A 20-something friend of mine who constantly complains about the high cost of cable was absolutely gloating about the recent over-the-top service announcements from CBS and HBO.
He proclaimed that the industry is finally moving toward a more consumer-friendly platform where viewers can choose to pay for the channels they want to see.
These two developments might seem like the beginning of the end for the traditional cable business, particularly if more networks jump on the direct-to-consumer bandwagon. The Wall Street Journal recently reported that Showtime and Univision are considering similar OTT streaming services.
Also, Viacom recently reached a deal with Sony to offer its networks, including BET, MTV and Nickelodeon, on a Sony-distributed streaming service that could cost consumers $15-$30 a month, according to The New York Times. ESPN also said it will stream National Basketball Association regular-season games as part of a new OTT sports service that could launch earlier than 2016, when the league’s new TV deal takes effect, commissioner Adam Silver told Multichannel News.
All of this choice is great for consumers looking to cut cable’s cord and go directly to the networks for their entertainment viewing. The question is, how much will consumers be willing to pay for their entertainment viewing freedom?
HBO will most likely charge a fee in the range of its $10 to $12-per-month cable subscription fee when it launches its OTT service in 2015. CBS will charge $5 per month for its service, which has already launched in 14 cities where it has owned-and-operated stations.
Ultimately, the costs will add up. An average family of four with pre-teen kids and teenagers would have to reasonably choose five or six networks, along with Netflix and Hulu, to placate everyone’s tastes and interests.
Say those networks charge $5 to $10 per month for their respective streaming services: With Netflix and Hulu’s fees included, you’re near the average $75-per-month fee cable charges for more than 200 channels, as well as the free on-demand services from most basic networks in its traditional bundle. And that’s above and beyond the $30 to $50 monthly cost of broadband service.
I told my friend — a big sports fan, as well as a rabid viewer of drama series from AMC, ABC, TNT and USA Network — to be careful about wishing for a la carte, because his wallet may not be fat enough to handle the cost of the programming choices he craves.
