As counter intuitive as it may seem, the emerging range of online video services might give pay TV subscribers little incentive to cut the cord, reunite existing cord-cutters back with pay TV, and even start driving would-be cord-nevers to adopt pay TV.
The conventional wisdom about OTT has been that the cost of online TV would be much lower than for traditional pay TV. Along comes DISH Network’s Sling TV, which only seems to reinforce that point. Comparing Sling TV’s $20/month with the typical entry-level pay TV package at $40/month – excluding monthly service and equipment fees – seems to bear that out.
Or does it?
A reality-check against the conventional wisdom
For the first time, there are enough actual online TV services that it’s becoming possible to make an objective comparison. So, let’s compare:
Basic Pay TV (for about $40 per month)
- Broadcast networks: CBS, NBC, ABC and Fox
- Networks found on pay TV: AMC Networks, CBS, Discovery Communications, The Walt Disney Company, Netwarko Grupo (Latino), Scripps Networks, Time Warner, Viacom and others
Online TV (…for about $40 per month!)
- DISH Sling TV ($20/month): AMC Networks, Disney/ABC, Netwarko Grupo, Scripps Networks, Time Warner
- Sony Playstation Vue (TBD, but let’s say $20/month): CBS, Discovery, Fox, NBC Universal, Scripps, Time Warner, Viacom
- Broadcast networks (live linear): Sony will offer CBS and Fox linear feeds in selected local markets.
- Or in place of Sony, you can opt for a combination of CBS All Access (which offers CBS linear feeds) plus HBO’s upcoming direct-to-consumer online TV service; probably for about the same $20/mo.
You might have noticed that Sling TV’s programming and Sony’s are almost mutually exclusive. They have only Scripps and Time Warner in common. So, an online-only subscriber who wants to come at all close to replicating a traditional MVPD’s line-up would need both DISH and Sony.
Is price the right metric for comparison?
My comparison make it look as if there’s price parity between online and pay TV, but this is not a truly fair comparison. Pay TV’s $40/mo for pay TV excludes monthly equipment rental and service fees; which bring it to about $60-70/month. Not to mention what the price might rise to after the new-subscriber promotional period wears off.
Okay: $60-$70/mo for pay TV, versus $40/mo for online. But unless the online subscriber abandons their Netflix, Hulu and/or Amazon Instant Video (or Prime) accounts – and many online subscribers take two or even all three of those, at about $10 each per month, plus or minus – the price comparison again comes closer to parity. (And let’s also acknowledge that $60-$70 price points are a lot higher than many of us envisioned…)
Both may taste great, but one may be less filling
Purely on the basis of the number of available channels, pay TV wins. Compare the lineups and prices from Comcast, AT&T U-verse and DISH Network (not SlingTV) with those from SlingTV and Sony Playstation Vue. Add all of the local and independent channels, and live local sports programming that you don’t get online.
One might protest that you can fill the local sports gap with online programming from professional sports leagues. But MLB.TV blocks programming for local games, in order to drive people back to local broadcast or pay TV. This may change, but for now, that’s the way it is. Plus, my local MLB games are included with my pay TV subscription, but MLB.TV starts at $19.95 per month. Yikes!
This situation makes me wonder: was it the plan all along to drive people back to pay TV? In the end, there may be very little incentive for pay TV subscribers to cut the cord, and very little reason for cord-nevers not to ultimately adopt the pay TV cord. DISH Network, for one, might be quite pleased with such a turn of events – and maybe this was DISH’s objective all along.
It comes down to priorities. Would you be satisfied enough with the limited lineups of online TV, and okay with filling the gaps with services from individual networks? Many people are. Many people are not.
Is TV having a dialectical moment?
In the discipline of philosophy, there is a method of resolving disagreements, called the dialectic process, which consists of a thesis, an antithesis, and a synthesis. Here, the thesis has been that OTT would drive people from pay TV. The antithesis has been the empire striking back, that pay TV would have sufficient value stem cord-cutting.
But this also can take an entirely different direction. The synthesis might be the emergence of the “hybrid subscriber,” in which one might take pay TV for local news and live sports, plus whatever else they get with the lowest cost basic subscription, and then get his or her premium content online from Hulu and perhaps HBO. In any of these scenarios, the alternatives might add up pretty close: a cord-never might end up paying the same as a pay TV subscriber would pay.