No, streaming is not more expensive than cable TV

Here we go again: The Financial Times ran a story a few days ago about streaming getting more expensive, with Disney and others continuing to raise prices for their subscription services. It’s a good subject to explore, but this point really stood out:

“A basket of the top US streaming services will cost $87 this autumn, compared with $73 a year ago. (...) The average cable TV package costs $83 a month.”

Streaming being more expensive than cable is a conclusion that’s click-baitey, tweet-friendly (and easy to aggregate) – and all wrong.

• The FT based this conclusion on the prices for the ad-free tiers of Hulu, Max, Netflix, Disney+, Paramount+ and Peacock – and it’s true, subscribing to all of them will cost you quite a bit of money, and even more once this fall’s price increases kick in.

• However, the beauty of streaming is that you don’t have to subscribe to a bundle, but can pick and choose. Most consumers don’t subscribe to each and every service at the same time. Being able to cancel month-to-month, and resubscribe when your favorite show is back, is one of the big advantages of today’s streaming world.

• Plus, if you want to watch it all but not spend an arm and a leg, you can always opt for cheaper, ad-supported tiers and / or bundles. If you’re okay watching some ads, the same six services will cost you just $38.95 per month. Committing to full-year subscriptions and other types of promotions can bring down the price even further.

And for that cable comparison … likening streaming to cable is like comparing apples to orange juice. Netflix is just not part of your cable bundle, and it’s fair to assume that many cable subscribers do pay for Netflix regardless.

• The closest point of comparison are the broadcast-aligned services, including Hulu, Disney+ and Peacock, as well as Max as a successor to premium cable channel HBO.

• To find the closest equivalent to the FT’s streaming bouquet, one would have to configure a cable bundle that includes broadcasters like ABC, CBS and NBC, basic cable channels like FX and the Disney Channel, and HBO / Max as a premium channel.

• I just did the calculation on the website of my local cable company, and a middle-of-the-road bundle with 125+ channels plus Max as an add-on would cost me a whopping $119.15 a month, once you include all the mandatory broadcast, sports and equipment rental fees. Want to pay by credit card, or watch on more than one TV? Get ready to pay even more.

So how did the FT arrive at an average cable bill of $83 per month? Apparently by googling “how much is cable per month,” which gets you to an article from Cabletv.com with that very number.

• However, that article notes that its author arrived at $83 by considering “introductory plan prices only” without including “fees for activation, equipment rental, DVR service, installation, local channels, premium channels, regional sports networks (RSN), and more” – as in: The stuff that everyone needs to pay in order to get cable.

• Cabletv.com makes its money with affiliate links to cable TV providers, and the site doesn’t exactly have a great track record when it comes to getting its numbers right: Last year, Cabletv.com published a story claiming that “the average monthly cable and satellite TV price rose from $395.64 to $529.52” over the preceding decade.

• That’s … a lot of money. It’s also completely bogus. Cabletv.com took those numbers from the U.S. Bureau of Labor Statistics’ Consumer Price Index, which has been tracking cable TV prices for 40 years now.

• The Bureau pegged the price of the average TV service bundle at 100 in 1983 – not because the monthly cable bill was $100 back then, but to show how the relative cost increased over time. By 2020, the price had increased five-fold, but not to $500.

There are real questions to be raised about streaming price increases, including whether it will lead consumers to switch to ad-supported tiers, or whether they will just jump ship and stream free services or even revert back to piracy instead. But clickbait content about the cost of streaming services helps no one. Not consumers, and certainly not anyone working in the streaming and TV industry.

This article was first published as part of Lowpass, a weekly newsletter about AR, VR, streaming and more. Sign up now for free.

Photo by Paolo Chiabrando on Unsplash