Stream Dreams

The Ever-Increasing Cost of Streaming

As Netflix raises its monthly fees and new competitors enter the streaming arena, the economics of cord-cutting is getting tricky.
Watching TV
A more traditional TV-viewing audience.By Bettmann/Getty Images

The promise of cord-cutting was clear: streaming TV would free us from expensive, outdated cable subscriptions. No longer would we be forced to pay for hundreds of unwatched channels when all we wanted to do was Netflix and chill, or Hulu and hibernate. But with Netflix announcing an increase in monthly subscription fees this week, and NBCUniversal declaring its intention to enter the increasingly crowded streaming arena next year, it looks like the price of keeping up with TV could soon be comparable to—or maybe even more expensive than—a cable-TV subscription.

So, how much are you willing to pay to watch your favorite shows? If you subscribe to more than one streaming service, you’ve probably picked them up gradually, which might make you less aware of how they all add up. And it’s not an incidental amount. Netflix just raised its prices by $1 to $2 per month, so its cheapest subscription now costs $8.99, and its most expensive (a sharing-friendly plan that allows viewing on four screens) is $15.99. Hulu plans start at $7.99 per month, with a $39.99 per month add-on option for access to live TV. Access to streaming video comes with Amazon’s Prime membership, which costs $12.99 per month, or $119 per year. Then there’s CBS All Access at $5.99 a month (or $9.99 without commercials). And for those who don’t pay for HBO or Showtime with their cable subscription, the HBO Now and Showtime streaming apps will run you $14.99 and $10.99, respectively. This doesn’t even get into other streaming package options like Sling TV ($25 to $40 per month), or DirecTV Now ($40 to $75 per month).

That snowballs into monthly fees between $58 and $105 (compared to a cable-subscription average of around $100 per month). And that’s just the first wave of streamers. NBCUniversal just announced an as yet unnamed service to launch in 2020 with about 1,500 hours of programming, culled from its various entertainment and news divisions. It would be free (with advertising) to pay-cable subscribers—and, according to CNBC, it would be available for an estimated $12 per month fee to cord-cutters. Other media behemoths jumping into the fray in the next few years include Disney+ and WarnerMedia. Although their pricing structures are not yet known, each of these will be launching with must-see programming that will come at an additional cost. In the face of this ever-escalating viewing budget, some TV fans are going back to basics. According to the Los Angeles Times, an increasing number of Americans are seeking out that old-school staple: the TV antenna.

Rich Greenfield, a media analyst with BTIG, who coined the Twitter hashtag #goodluckbundle to document the demise of the traditional cable bundling of channels, does not see the profusion of new streamers as a burden, but as a boon to consumers, who are free to be as fickle as they like. In the legacy cable world, canceling your subscription was a huge deal. “If I want to cancel Charter Spectrum in New York City, I have to take a day off work and wait for the installer to pick up my stuff, or I have to take it apart myself and stand online at the store,” he said. Whereas with streaming, “You can sign up for HBO to watch True Detective or Big Little Lies—and then you can cancel with a click of the button. The consumer has been empowered. The friction is gone.”

That creates a problem for most of the streaming providers. They each need to keep subscribers hooked enough to keep them from that binge-and-cancel churn—which is why media companies are on talent shopping sprees, madly scrambling to lock down deals with big names and figure out who will hold the rights to shows that viewers watch over and over. It explains why Netflix coughed up a reported $100 million to hold onto WarnerMedia’s Friends, and NBCU head Steve Burke told Deadline it was a “safe assumption” NBCUniversal’s future streamer would pull back a popular show like The Office from Netflix.

“The problem for these legacy media companies like Disney, WarnerMedia, and NBC is that they’ve never lived in a world where you can cancel instantly,” Greenfield said. He believes Disney chief Bob Iger’s stated aim to create niche streaming services (Disney+ for families, Hulu for adults, ESPN for sports fans) misunderstands this changing TV ecosystem. “You have to go back to the future and create a big bundle of lots of content within each service, which is what Netflix is doing.”

For TV addicts, the future offers an avalanche of choices, both in terms of what to watch and where to put your money. (Whether that sounds liberating or exhausting depends on your mind-set.) And for the media companies, it will be an all-bets-are-off struggle to guarantee its streamer is indispensable to viewers, lest we snip that invisible cord.