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A couple of years ago, when it began to look like HBO was taking some steps toward offering a standalone service, I got into an extended debate about how much I’d pay for such a service.
My bottom line: $ 9.99 per month. Tops.
Yes, I love a lot of HBO shows. And our family had cut the cable cord. But with subscriptions to Netflix and Hulu already on the bill, there was a limit to how much I’d pay – for how many channels – with unique content like HBO.
So during the Apple event yesterday, when HBO’s chief said it was offering HBO Now as a standalone service on Apple TV for $ 14.99 per month, I shook my head. The amount was more than off the mark. It’s a reminder of just how misguided the dream of breaking up the cable bundle remains.
Cord cutting in general remains less of thing than many pundits would have you believe. According to industry one report from Leichtman Research Group, the number of people cutting the cord dropped in 2014, and was the lowest rate since 2008.
“2014 marked the second consecutive year for pay-TV industry net losses, but the losses remained modest again this year,” said Bruce Leichtman, president and principal analyst for LRG, in the report. “Despite a relatively saturated market, and increasing alternatives for consumers to watch video, the top pay-TV providers have only lost about 0.2% of all subscribers over the past two years.”
Yes, many millennials are simply never subscribing. Over time, over a VERY long time, it’s likely that the cable bundle model will get disrupted. But over the next decade, even as streaming options continue to explode, it’s likely these services will only nibble away at the edges. The logic of blowing up the cable bundle simply isn’t there.
Consider the latest “deal” between HBO and Apple.
First, it’s worth noting that there is less to the HBO “exclusive” with Apple than it appears at first glance. The deal only gives Apple a three-month window. And according to HBO’s FAQ, the $ 14.99 price is in fact subject to change with different partners.
It’s not entirely clear who those other partners might be, since your HBO subscription via your cable company already gives you access to the HBO Now app. Maybe Comcast will sell you a broadband connection bundled only with HBO Now? Stranger things have happened, I suppose.
Still, rather than being a victory for cable cutters, the HBO Now deal with Apple demonstrates just what a bargain the current cable bundle really is.
At the moment, you could sign up for new Comcast service in the Bay Area and get 140 channels for $ 39.99 for the first 12 months. Those channels include AMC, TNT, the hideous slate of 24-hour news channels, and the ESPN channels. HBO is an extra $ 10 per month.
So, for $ 50 you can get more channels than you want or need. Which, for some reason, is a thing people like to complain about.
But if you get HBO Now for $ 15 per month, you can bet ESPN is looking at that and thinking its much larger volume of exclusive content is worth far more. Even if it only charged the same, you’re up to $ 30 for two channels.
How many more channels with the remaining $ 20 can you get? Probably not many. Maybe four, if you’re lucky and only if AMC would be willing to charge less than $ 10 per month.
All for the satisfaction of sticking one to the cable companies we all love to hate, plus the inconvenience of trying to hunt down all your favorite programs across a wide range of platforms and streaming services.
That is the tortured bit of reasoning in this BGR piece that typifies the odd reasoning behind the cable cutting argument. BGR adds up the bill for the services you’d need to replace part of your cable service, and says:
“The beauty of cord cutting isn’t that it’s guaranteed to save you money, it’s that it at least gives you more options for doing so if you are sick of paying hefty sums for a cable bundle just for a few choice shows.”
So, you’re likely going to wind up paying more, for less. Which seems like an odd way to claim victory.
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