Last week, my colleague Daniel Frankel reported on the results of his experience as a brand-new cord cutter. It's clear that the experience was less than enthralling: He had to make a lot of complicated decisions, determine which streaming services were worth subscribing to, buy some extra equipment, and in the end felt that he failed to save so much as a dime. (No, really, he saved like, 8 cents. Not even a dime.)
In my latest feature I take a look at the costs involved in cutting the cord. Even though I stuck to average broadband prices and the most popular streaming services and equipment in estimating these numbers, the breakdown confirmed a couple of big problems with living the cord-cutting dream, ones that Daniel ran straight into. First, that creating a viewing experience similar to that provided by pay-TV is an expensive proposition, requiring hundreds of dollars up front. Second, consumers then are faced with an increasingly complex array of content choices with a dizzying range of prices.
A third problem isn't addressed in the feature, but is worth noting: having access to the broadband speed necessary to stream HD-quality video, which still afflicts between 6.3 percent and 13.1 percent of Americans, (depending on one's definition of minimum acceptable downstream broadband speeds, either 4 Mbps or the FCC's latest recommendation of 25 Mbps).
Part of the issue is that many consumers just aren't aware of the up-front costs involved with making the switch entirely to an OTT-based entertainment world. They also have to become comfortable setting up and working with equipment that may be completely new to them. For pay-TV subscribers who for decades have expressed frustration with the complexity around hooking up a cable set-top box, the thought of having to purchase, set up and customize several electronic devices is probably daunting.
Of course, cord-cutters don't have to invest a ton of money up front if they are willing to make some big compromises. If cutting the cord is purely a way to save money, then a broadband subscription, a streaming-capable device or smart TV and an HD antenna will suffice. If they are a sports fan, however--viewing gets more complicated and more costly.
Viewers also don't have to go purely one way or the other: They can retain a basic pay-TV subscription and ease into the online video waters. For example, an increasing number of MSOs, like Suddenlink and Mediacom, are giving their subscribers OTT options like Netflix, thanks to a hybrid set-top box provided by TiVo.
Take a look at this list of the estimated costs involved in cutting the cord, which considers different price options and a consumer's monthly outlay after their initial up-front purchases. And let me know in the comments if you agree or disagree with these amounts--along with the alternatives consumers have available to them.--Sam