Commentary

How Much Could I Save With OTT VOD Plan Rather Than Bundled Cable?

by John R. Osborn , Op-Ed Contributor, March 5, 2014

Editor's Note: This classic Video Insider originally ran on March 5, 2014.

Today I am channeling my “inner Milennial” by doing an exercise to determine what would be a more financially responsible choice for my personal T/V viewing:

OTT (Over-The-Top) options where I build my own unbundled VOD programming system, or
The traditional, bundled cable television subscription I’ve habitually had since the 1980s.

Step 1: Acknowledge the fixed cost that will remain whether I choose OTT or cable:

OTT or cable: WiFi service

Step 2: Identify programming elements I most want:

Sporting events (pro football, pro hockey, some college football, basketball and hockey, WNBA)
Broadcast networks (entertainment, events, PBS)
Cable networks (entertainment, events, documentaries, premium networks HBO, Showtime)
On-demand (feature films, pay-per-view)
News (weather, traffic, local news)
TV Everywhere (above programs available on any platform: smart TV, smart phablet, laptop)
Netflix, Amazon original programming (“House of Cards,” etc.)

Step 3: Identify programming elements I don’t need through my television:

C-Span, home shopping, foreign language, food, travel, fashion, women-targeted, kid-targeted, business news, music, “adult”

Step 4:Understand the cost of buying 350 channels, some of the 4,000 on-demand shows and TV Everywhere from my current cable provider: $146.28 per month.

-- DVR Service: $12.95
-- TWC Sports Pass: $8.99
-- Package Allocation: $0.01
-- DVR set-top box: $8.05
-- Starter TV: $18.31
-- Remote: $0.20
-- Standard TV package: $39.48
-- Variety Pass: $9.63
-- Premium package (HBO/Showtime): $27.95
-- Average PPV movies: $10
-- Taxes, Fees, Surcharges: $10.71

TOTAL MONTHLY CABLE SUBSCRIPTON FEES & TAXES: $146.28

Step 5:Identify OTT substitute cost of only programming I most want. Total monthly average: $111.78.

-- Google Chromecast incl. tax (to link programming from my laptop and smartphone to my Smart TV): $35
-- NFL Rewind: $69 /Season + Playoffs (day-after replay is OK for me)
-- NHL GameCenter Live: $169/Season (48-hour delay for nationally televised or blacked out games OK for me)
-- ESPN must-see events at friend’s house or sports bars: est. $150 a year
-- March Madness on CBS through Aereo (see broadcast networks below)
-- WNBA Live Access: $14.95/Season (2013 pricing)
-- Broadcast networks (entertainment, events, PBS): Aereo with Cloud DVR or Hulu plus: $8/month
-- Cable networks (entertainment, events, documentaries, HBO, Showtime): View after blackout period through cable network online sites or binge-view in future from Netflix, Amazon (see below).
-- On Demand (feature films, pay-per-view): Netflix @ $14.99/month and Amazon Prime @ $119/year (anticipating price increases for each)
-- Pay-per-view on Amazon and other online streaming outlets or DVD rental: $250/year
-- Free online sites for weather and traffic with occasional online subscription for sports: $150/year

Sub-totals
Annual fees pro-rated per month: $79.76
Monthly fees: $22.99
Monthly estimated sales tax: $9.03

TOTAL MONTHLY A LA CARTE FEES & TAXES: $111.78

Conclusion: I could save at least 23.6% of the cost of my cable bill without losing much in terms of the programming I enjoy -- or $34.50 a month, for a total of $414 a year.

To be honest, I thought the savings would be much greater.

Now would be the time to pile on arguments for going one way or the other, depending on your gut feeling about the value of the bundled approach vs. the unbundled OTT approach. I’ll list a few of the more subjective pros and cons as thoughtstarters:

Pro-Cable (bundled): more predictable pricing; much more choice; less work hunting down programs from various sources; more unified delivery and servicing; TV Everywhere solves multiplatform challenges.

Pro-OTT (unbundled, a la carte): I pay only for what I watch, not for what I don’t watch; the oligopolies of cable and satellite keep pricing unnecessarily high; single companies can no longer dominate T/V production and distribution, and competition among companies is good for consumers; I am helping smaller businesses and technological innovation grow.

In the end, though, the difference is not as large as I had thought before this exercise. So where we will best get our T/V programming needs met is a very personal decision for each of us. I’d love to hear your thoughts in the comments section.

cable, cable tv, streaming, video

4 comments about "How Much Could I Save With OTT VOD Plan Rather Than Bundled Cable? ".

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Chris Verdugo from Contra Costa Television, March 5, 2014 at 5:33 p.m.
Maybe I missed it, but did you include the cost of a broadband connection in your OTT calculation?
And, while it's too bad that CSPAN and other public affairs channels may not float your boat, there are cable channels that serve the information needs of the community. PEG channels - Public, Education and Government Access TV serve an important part of the local information ecosystem.
The channels are typically underfunded and therefore mostly unavailable online.
Thanks for the post. For the most part, you do a good job of comparing apples to oranges, without the sour grapes.
Reply

John Osborn from Turnstil™, March 11, 2014 at 4:51 p.m.

Thanks Chris - I actually considered WiFi access/Broadband connection to be additional and equal in either case in step 1, though it could be argued that the "triple play" discount would advantage the cable option. I take your point about the public access, though I don't gravitate to them myself, I agree they are important. The exercise is a very personal one for my viewing habits, and it would be interesting to see how other viewer profiles fared in the comparison.

John Osborn from Turnstil™, March 11, 2014 at 4:52 p.m.

Any more comments?

Jeffrey Hardy from FilmProfit, LLC, September 2, 2014 at 2:55 p.m.

Nice that you took the time to do this and try to ferret it out. Many others would come up with quite different results. Look, you are consuming a wide array of sports, which is what the cable companies shove down the throats of the otherwise unsuspecting. The carriage (and per-channel) sub fees for sports are FAR higher than anything else. The question is not, really, looking at your fascination with sports of almost every type, from WNBA to Hockey to Football, but what would someone who is not a sports nut save without what to them is a ham-handed stuffing of content costs down their throat. I think there should be solutions for everyone. You do not care about C-Span, so those who are politically inclined would not agree with you. The viewers who are not so interested in sports subsidize the sports viewers to the tune of something like $2B a year (and that was in early 2013. SEE http://www.videonuze.com/article/not-a-sports-fan-then-you-re-getting-sacked-for-at-least-2-billion-per-year. You might just want to stick with cable, who wants you, clearly. It might be worth the saving of the trouble. But, also, why are you including fixed costs, like a Chromecast in subs, etc.