Hulu announcing a price hike to $64.99 for its cheapest live TV service plan will cause many to question cutting the cord. YouTube TV announced its price increase to $65 in July, and around the same time, fuboTV raised their prices as well. Hulu Live TV and YouTube TV are the top streaming services for those looking to replace cable TV. Not only do they provide subscribers a way to stream many popular cable channels, but they also provide a way to stream local broadcast channels in most TV markets. The only service under $60 per month remaining that reliably streams ABC, CBS, Fox, and NBC is DIRECTV Stream Now. However, they lag behind their competitors in the number of cable TV channels they offer. In this article, I’m going to try and make some sense of where live TV streaming is headed by examining the following:
- the reasons for these price increases
- Do services like Hulu Live TV, YouTube TV, and fuboTV still save money over cable
- are there other ways you can save money on your monthly TV Bill
Why Streaming Services Keep Raising Prices
When YouTube TV launched just over 3 years ago, the monthly price was only $35 per month. Hulu + Live TV launched just a few months later for $40 per month. With the cost of streaming almost doubling since then, these services’ cost-saving benefits are harder to justify. The reason the cost of live TV streaming services has skyrocketed is the same reason cable TV prices are so high. The network owners force TV providers to license channels in bundles. For example, if a streaming service wants to provide the Disney-owned ESPN in a channel package, they just can’t license it from Disney on its own. They have to license the entire Disney bundle.
They have to take the entire ESPN brand along with Disney Channel, FX, National Geographic, and all the other networks Disney owns. (Except ABC. Broadcast networks work under a different retransmission fee model.) According to research by SNL Kagan, the cost to companies like Hulu Live TV and YouTubeTV to offer the Disney bundle is estimated to be nearly $16 per subscriber per month.
For streaming services, 100% of this expense affects their bottom line, and they would have to pass that cost on to the consumer to be profitable. Furthermore, streaming services don’t distribute TV networks for their enjoyment. They would likely pass the cost plus a profit margin markup along to consumers sending the monthly price of their most affordable streaming plan above $60 per month.
And while ESPN is one of the most expensive channels on cable TV, all the network owners tend to force streaming services to take a bundle of channels for a lump sum price. Just look at SNL Kagan’s estimate for what providers pay monthly to offer consumers these channels:
- AT&T bundles TNT, CNN and TBS, and more at $6.50 per subscriber
- Comcast/NBCUniveral bundles USA, Bravo, CNBC MSNBC, and others for almost $6 per subscriber.
- Viacom/CBS charges around $5 per subscriber for a bundle of Nickelodeon, BET, MTV, Comedy Central, CMT, Paramount Network, and others.
- Discovery bundles Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, OWN, Travel Channel, and others for over $3 per subscriber
- Fox Corp. bundles Fox News, Fox Business with FS1 and FS2 costs a provider around $3.50 per subscriber.
- AMC Networks (AMC, IFC, We TV, BBC America, and SundanceTV) will run about $1.50 per subscriber.
- Kagan also estimates ABC, CBS, NBC, and Fox each charge $2.50 – $3 per subscriber. That means an additional $10-$12 per month to stream local broadcast networks.
If we bundle Disney’s networks with the other networks above, the cost per subscriber/per month would be close to $52. Let’s round that to $55 to cover basic cable channels not mentioned, and we can see why streaming services like Hulu+Live TV are priced so high. These are analyst estimates, and I’m sure those prices are negotiated down, but we haven’t factored in costs to run the actual business. Streaming services have to page other operating expenses like salaries, marketing, and technology. One can imagine many live streaming services either have a thin profit margin or are operating at a loss.
Networks continue to increase fees, which is the driving factor for the continual price increases every year of live TV streaming and traditional pay-TV services. So now we know why prices are skyrocketing. However, what does this look like to the consumer? If they want to watch live TV, should they opt for streaming services or traditional cable and satellite?
Live Streaming Services Vs. Cable TV
In my view, Hulu Live TV and YouTube TV are really the only choices when looking for an all-in-one solution to replace cable TV. The biggest reason is having ABC, Fox, CBS, and NBC in their solid channel lineups. Considering standalone internet will cost most people $50-$60 per month (a requirement for streaming), the $65 per price tag on these streaming services brings the price of cutting the cord to around $120-$130 per month. How does this price compare to an internet and TV bundle like Comcast’s Xfinity?
Currently, Xfinity offers a plan in my area that provides 200 Mbps of internet and their “Standard+” channel package for $89.99 for the first 12 months. If my research stopped there, this wouldn’t be a very long article. However, if you click on the fine print, you will see the following statement in a wall of text:
Equipment, installation, taxes and fees, Broadcast TV Fee (up to $19.45/mo.), Regional Sports Fee (up to $14.45/mo.) and other applicable charges extra, and subject to change during and after the promo. After promo, or if any service is cancelled or downgraded, regular rates apply. Comcast’s monthly service charge for Standard+ is $109.99 (subject to change).Source: Comcast
Remember those fees the networks charge? Cable companies started passing those costs for regional sports and broadcast networks directly on to the customer. Streaming services bake those charges into one monthly price. Analyst estimate the big 4 networks (ABC, FOX, CBS, and NBC) cost providers around $12 per month. Considering several smaller broadcast channels are in a cable package, that fee can get close to $25 per month.
Those hidden fees push the 1st year promo price of Xfinity to $123.89. We also have to consider the $65 Hulu Live TV service lets you watch on 2 TVs. With cable, you will need two cable boxes with fees for two TVs. Comcast charges $5 per month for the first device and $6.99 per month for additional boxes. This brings the promotional price of Xfinity TV and Internet to $135.88 per month. However, that’s the first year. The price increases to its regular price the following year, pushing the price up another $20 to $155.88 per month when the promotional rate expires.
Streaming Services Will Likely Raise Prices Again
When Hulu Live TV was released in May 2017, it cost $40 per month. Since that time, Hulu has increased its live TV service price to an average of $8.33 a year. Since live TV streaming is a newer service, these companies were likely operating at a loss in the first few years. It’s hard to judge what the future price increases to these live streaming services are going to be since a portion of these yearly increases compensates for the service’s initial underpricing.
However, If we annualize Hulu’s history of live TV price increases, this last price increase would have been about 6.8%. This is more in line with what we see from cable TV. A 2018 report from research firm Kagan shows cable TV and internet prices have increased at a steady 5.5% per year for nearly 20 years. It would make sense that the yearly cost of live streaming and cable eventually fall in sync with each other since it’s the TV networks really drive up costs for both.
Is Hulu Live TV Cheaper Than Cable
With promotions and hidden fees, it’s difficult to see which is cheaper in a given year. However, if we take the data we have and project it over a few years, we can see which is more affordable. To do this, we need to figure out what an internet-only plan will cost. This will vary widely based on where you live. The number of internet service providers in your area greatly affects the price. Living in an area with 2 broadband providers, I can keep my internet costs under $50 per month by taking the ISP with a better promo price each year. However, if I lived in the next county over with only one provider, I would be paying about $77 per month for broadband. Survey data from consumer reports show American households pay an average of $66 per month for broadband internet access.
I’ve taken the information and put a table together to see which is cheaper after 5 years, Hulu Live TV and Internet or an Xfinity TV and internet bundle. The table below assumes the following.
- Standalone internet is assumed to cost $66.
- Standalone Internet and Cable Bundle Prices will increase by 5.5% per year.
- The price of Hulu Live TV will average an increase of 6.8% per year.
- Year 2 of the Cable Bundle factors in the $20 price increased due to the promo price expiring.
|Year||Internet Cost||Hulu Live TV||Hulu + Internet||Cable Bundle||Savings|
As you can see from the table, even with Hulu’s latest live TV price hike, it’s still a cheaper solution than cable TV. However, the first year is nearly a wash with a cord-cutter, saving a little over $50. Yet, over 5 years, Hulu Live TV and a stand alone internet connection will save an average of $250 a year.
That $250 a year isn’t going to be enough money to convince many to drop cable TV. In an area where internet access costs about $65 per month, one would have to take non-monetary factors into account when switching from cable TV. Factors like:
- Hulu Live TV comes with a massive On-Demand catalog and original programming you won’t find on cable TV.
- Live TV Streaming Services don’t force you into a contract so that you can cancel service without a penalty
- No Device fees
Some may argue that you get more channels with cable, and while that may be true, a lot of those channels are filler most people won’t watch. When considering TV channels people actually want the watch; cable package channels were comparable to Hulu Live TV’s channel lineup. Comcast has channels Hulu doesn’t but is missing some channels Hulu offers.
For example, the Xfinity plan I looked at lacks channels like CMT, Disney Jr, Disney XD, and ESPNews. Hulu + Live TV has those channels but lacks some in Xfinity’s lineup like AMC and Discovery Channel. Even if the channel lineups weren’t that close, you have an extra $20 a month in savings to make up the difference.
And believe me, $20 a month in savings is disappointing compared to what you could save just 3 years ago with Hulu+Live TV. But keep in mind, that number only applies to people with one ISP in their area. In areas with more than 1 ISP, consumers are likely to get a better monthly price on internet access. Finding internet access for around $45 per month makes the math work to save over $500 per year. However, if you want to save more, we will have to try some of the techniques described below.
How To Still Save Money Cutting Cable
Live TV Services are costly. I understand the convenience of an all-in-one replacement for streaming cable TV and local network channels, but that isn’t going to save you much money. To really save money cutting the cord, you need to revisit some of the things cord-cutters did before live streaming services. In 2013 my family saved well over $1000 on cable by doing the following.
Take Advantage of Free TV Options
The following options are the best way to save money when cutting the cord.
Use A TV Antenna
The allure of live streaming services like Hulu Live TV is access to local broadcast channels. However, if you live in or near a metro area, free broadcast channels are all around you. You just need an antenna. I recently reviewed a cheap $25 antenna that could pick up 49 channels in my area, including ABC, NBC, Fox, CBS, The CW, PBS, Bounce, Court TV, MyTV, Comet, Stadium, and more. The best part is the antenna I reviewed had a no-questions-asked return policy, so if you aren’t happy with the results, just send it back. Antennas are very easy to use and set up. We put together a great guide with some tips and tricks on using TV Antenna.
Use Free Streaming Apps
There are a ton of free streaming apps available online. If the idea of setting up an antenna bothers you, you can try the free service, Locast. Locast is a free-to-use streaming service that provides local ABC, FOX, NBC, CBS, and more 100% free. You can even watch Locast using a streaming device. Locast supports Roku, Apple TV, Fire TV, and Android TV. It’s only available in 25 TV markets in the US, but it’s like having an antenna without the hassle of setting one up. You can read more in our review of Locast.
Another free option would be using the broadcast TV apps to watch primetime shows on Fox, NBC, ABC, and more. You have to wait a few days for network TV shows to be available after they air, but you can watch many hit shows this way for free.
Be Frugal With Streaming Subscriptions
There are many streaming services to choose from these days. . Subscribing to every service offering something you want to watch will not save you money. That is unless you drop the service as soon as you finished watching the show. Streaming services don’t lock you into long term contracts, so you can cancel any time you like. To save money, I recommend carrying 1 or 2 subscriptions long term that offer a lot of content and then cycling other services based on your budget.
For example, let’s assume I’m an Amazon Prime member. I could use Amazon Prime as the service I want to watch long term. But, I have a bunch of other shows I like on Disney+, HBO, and Showtime. If my budget only allows for an Amazon Prime subscription and one other service, I would pick up HBO one month to watch my favorite HBO shows. The following month, I would drop HBO and pick up Showtime. I’ll watch Showtime until I’m out of content, then cut it and pick up Disney+ the following month. This method lets you watch all your favorite, from any service you like, while saving as much as you like.
Best Value On Demand
Here are some of the On-Demand Streaming services that offer good value.
Disney+, Hulu, and ESPN+: You can get all three of these services for only $12.99 per month! The deal provides everything on Disney+, combined heaps of on-demand and original content on Hulu, with ESPN+ as a bonus. I haven’t encountered a better streaming value yet. This Hulu portion of this deal only includes the Hulu on-demand streaming library. You may already subscribe to this or have it by subscribing to Hulu with Live TV. If so, you can still get the bundle pricing. Having this much content at your fingertips makes this deal a solid choice as your primary on-demand subscription.
Prime Video: Amazon Prime Video is a reliable option for your main on-demand streaming service. They have a deep catalog of both originals and past seasons of TV shows on both Network and Cable. It’s a robust service that always has something interesting to watch that you haven’t seen. The best part is, it only costs $8.99 per month.
Netflix: I would be remiss if I didn’t mention the service most people already have, even if they haven’t cut the cord yet. There is a mountain of TV shows and movies available on the service, which starts at just $8.99 per month.
Check out our streaming services page for information and articles on other streaming service options.
A Money-Saving Example
Just because live TV streaming seems to be more in line with cable TV pricing doesn’t mean cutting the cord still isn’t a viable money-saving endeavor. You just have to bypass those expensive services. There are plenty of affordable and free ways to watch the shows you like. Here is a real-world example of how one can save some real money by cutting the cord.
If you are lucky enough to live in an area with at least 2 providers, you can likely keep your internet access costs under $50 per month. Just remember not to overpay for internet speed you don’t need. A connection of 25-50 Mbps is a good internet speed for streaming. You can get a 200 Mbps Fios Internet plan for just $39.99 per month in my area. With Fios, you can even save money by using your own router. You don’t even need a cable modem.
Of course, you will want to use a TV antenna for local channels. Free ABC, NBC, FOX, and CBS are easy to save, and one of the most overlooked steps when cutting the cord. Some may worry about not having a way to record shows. However, you could use a Tablo DVR to record shows from your antenna. This device plugs into your router, and transcodes shows you want to record from your antenna. The best part of this solution is you can record and watch shows using a streaming app. It’s like your own personal streaming service. At the same time, it does come at a steep upfront cost of $300 ($150 for the DVR and $150 for the lifetime subscription to the TV schedule guide.) However, you don’t pay anything else after that one time cost. I understand that it is a huge upfront cost, but it saves money in the long run. If that cost is unacceptable, you could use the Network channel apps to watch most primetime shows for free.
We have a way to watch and record network channels, but you may want access to cable networks like A&E, HGTV, Hallmark, etc. Look at subscribing to less expensive live TV streaming services like Philo ($25 a month) or Sling TV (starts at $35 per month.)
These services carry many networks found on cable, but Philo streams no local broadcast networks, and Sling TV streams local networks in only a handful of markets. They are the choices to look at for those that want cable channels but have a way to watch NBC, ABC FOX, and CBS. If interested in either, then take a look at the following:
Most people have a service like Amazon Prime or Netflix, even if they have cable, but since we are doing a full example, I will include those prices. I typically recommend setting a budget for on-demand and juggling service. Considering you can pick up a premium service like Netflix or HBO Max for around $15, and then a more affordable service like Disney+ for under $10, a $25 on-demand budget per month is more than enough for most people. Just switch services every month to watch the TV shows and movies you want.
So what does this example cost every month? Let’s make another 5-year comparison and see how this performs compared to cable TV and internet. I’m going to factor in the following costs my first year.
- Fios Internet with own router – $39.99/ month
- Philo for live cable – $25/month
- $25 monthly budget for on-demand
- $0 for free broadcast networks with an antenna
Please note that live streaming on-demand is similar to on-demand found on cable TV. In this example, we won’t have the same on-demand options with Philo as we do with Hulu Live TV. To compensate, I added an on-demand cost per month. However, to be fair, most people with cable have Netflix or Amazon Prime. So in our cost comparison below, I’m adding 50% of the on-demand column to the cost of cable.
In the areas where you can get Fios, you likely can also get Xfinity Internet. They have a similar speed offering to Fios for $49.99. I will be playing these services against one another to take advantage of the promo pricing. Basically, I’ll use Fios for internet access in years 1, 3, and 5, and I’ll use Xfinity in years 2 and 4. I recommend picking up your own modem for Comcast as it will save you money on device fees after just 10 months.
I will also add in a $465 upfront cost in year one. This is for the following costs: $300 for DVR, $25 for Antenna, $40 for streaming devices, and $100 for your own modem. I want to make sure I track all costs in this example. The table below assumes the following:
- Standalone internet costs switch between providers every year.
- Standalone Internet and Cable Bundle Prices will increase by 5.5% per year.
- The price of Philo will average an increase of 6.8% per year.
- The Price of On-Demand will average a 7.5% increase per year (This is based on Netflix price increases)
- 100% of the On-demand Cost is added to streaming.
- 50% of the On-Demand cost is attributed to cable to simulate having a streaming service like Netflix
- Year 1 of Streamings has a $38.75 monthly cost added for upfront equipment costs.
- Year 2 of the Cable Bundle factors in the $20 price increased due to the promo price expiring.
|Year||Internet||Philo||VOD||Streaming||Cable + VOD||Savings|
This is a very good cord-cutting set up. With this solution, you have all of your broadcast networks with an Antenna, a DVR to record them, cable channels through Philo, and on-demand content you chose every month. This solution will let you watch just about anything you want to. Your on-demand budget can cover Disney+, ESPN+, Hulu On-Demand, and Netflix in a single month. That’s a ton of content and blows any traditional TV provider out of the water. Plus, the savings average to over $900 per year compared to cable. Buying the equipment to cut the cord is a bit of a hit to the wallet, but you are still saving in year one compared to cable.
So the answer is yes. Cutting the cord is still worth it. You can even save a lot of money. In both our examples, you are saving money every year. In our second example, you are saving over $1000 in some years. It even looks like you can save a little money by using a live streaming service like Hulu Live TV. However, if you want to save a lot of money, you want to go back to the basics of cutting the cord.
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