Analyzing Costs for Going Cable Free - Step 3

The buzz word is Internet TV at the moment.  But this means many things to anyone you ask.  That’s because there are many options on how to achieve your needed level of programming content.  How you get to the content is more interesting because the devil is in the details.  Ultimately, there are many avenues that all lead to television programming content.  Our cable-free options could become one of the following:

·         TV programming via high-speed internet. This may end up becoming one component of the entire solution. 

·         We go completely smoke signals with an antennae. An antennae to catch the traditional and HD channels becomes the primary form of television access.   

·         Internet tv ready devices.  An investment in one or several Internet tv ready devices may be optional for us after considering usage for each device. 

·         We stick with our cable option. Considering that this is an experiment with three HD ready televisions and an effort to reign in cost per program watched, going back to cable could still become a solution if the Internet services can’t provide the level of viewer satisfaction we require.

Yearly Content Acquisition Costs

I'm of the opinion that how you get to the content is most interesting because the devil is in the details.

  

Programming costs per service/device	Year 1	Year 2	Year 3+	Total cost for first 3 years*
Satellite tv	$ 300	300	300	$900
Cable tv (ATT Uverse 260 channels)	$948	948	948	$2844
Cable tv (Digital Preferred 160 channels)	$479.88	1019.88	1019.88	$2519.64
Roku box –XD version	$79	0	0	$79
Apple TV	$99	0	0	$99
Netflix subscription	$95.88	95.88	95.88	$287.64
Hulu Plus subscription	$95.88	95.88	95.88	$287.64
Antennae	$75	0	0	$75

*estimates do not include the monthly fee for internet connectivity; Cable packages assume a lower tiered viewing options; Satellite tv assumes only 40 channels; Subscriptions assume internet only options; Internet TV device boxes assume a mid-level product if available.

If users select an Internet TV device, say Apple TV, and Netflix and Hulu Plus subscriptions, the total 3-year cost is estimated to be: $674.28 versus $2500 with a cable provider.  Even with adding in a mid-grade antennae, users spend only $750, or less than 1/3 of the total expense from an cable provider.

Viewing Experience

The cost examples should certainly appeal to most users on the face of it.  The viewing experience is another factor to consider in the equation.  Can we watch the same content, or nearly the same content, for the same or less pain, aka commercial time to program time?   

Why Cable Providers Could Miss the Transition to Internet TV

I feel for cable companies.  They've been operating for years in monopolistic settings arranged by the Federal government and have taken little time to see that the rise of the internet will clearly cut into their subscriber bases.  Most cable companies have disregarded any mention of users cutting the cable cord, scoffing at the idea that users are as comfortable watching programming on their computer or smart phone as they are on a glossy high-end LED tv.


Screen Size Versus Content Availability
Leveraging Moore's law, the pace at which users are willing to accept a smaller screen size- aka computer- for more video availability is on a dramatic upswing.  Twenty-somethings are accustomed to viewing what they want when they want it and are display agnostic.  Sure, watching a movie on a large HDTV screen is certainly better when you're with a crowd, but if it's one or two of you, does it matter as much?  Not to twenty somethings.  And, this trend, is sure to creep up in age demographics as technology gets faster and wireless rate speeds increase.


The Cost of Programming
Another aspect that cable companies are failing to take notice of is that the price of entry for many InternetTV solutions is far less than the monthly subscription amount to a cable providers television programming.  If users are paying $60-100 just for a certain number of cable channels, how do they feel about paying $20 or $10 or zero per month for ample or nearly limitless content that is available, for the most part, whenever a user wants to watch?  


Comcast is just starting to test different versions of its content programming plus internet channel and web searching features on its own set-top box.  The set top boxes are created by Cisco who has a nifty solution for its cable providers.  Verizon says it sees more subscribers jumping onto their FIOS product, which is traditional cable channels that will allow for more programming watching on other devices as technology rolls out across the country.  DirectTV is using a sling box that gives users the power to watch content from their smart phone to computer and HDTV.   


Marketshare Shrink
Several internet TV devices are already on the market that allow users to completely go around the cable channel provider and instead directly access the internet for content.  Items such as the Roku box, http://amzn.to/glkiqM , which we reviewed in our last post, the Boxee or Apple TV, http://amzn.to/hlNpwS,  give users access to free content channels and nominal subscription channels (Netflix subscribers can view thousands of movies, television and premium channel programming for a low monthly fee of $7.99/month) for the price of two lattes each month and a device price of less than $100.


Cable Operators Chalk It Up to Cost Savings
According to the Wall Street Journal, "the number of US households that subscribe  to cable and other paid TV services fell for the first time since the advent of cable over the past two quarters - by about 335,000 households out of about 100 million, according to data provider SNL Kagan.  
Comcast and othe rcable operators say those declines are predominantly among homes optiong to watch TV over the air rather than online.  Comcast is the largest paid television operator in the US with 22.9 million US video subscribers at the end of the third quarter, 21% more than the second largest US tv-service provider, DirecTV.
Comcast says it lost approximately 275,000 video customers in the third quarter of 2010.  The company expects further declines in video customers for the remainder of the year.
If you want to read more on Comcast's test to add the Web to your TV experience, read here:  http://on.wsj.com/fecaUp

Viewing Habits Are Changing
Where Comcast is likely wrong is in its gathering that users are un-subscribing to cable to go to an antennae and not viewing anything online.  I'm contending that there's more going on here, based upon our own experiment with improving our viewing quality while minimizing or maintaining costs.  Users are already accustomed to viewing things on the internet and it's more likely that users are going to an antennae AND internet viewing options over cable.

Our Experience with InternetTV
So far, we're finding that our user experience is as good or better with our Roku XDS box, http://amzn.to/eFZ4hR, because we avoid commercials.  Saving around $60 per month is also a plus.  Until cable can reduce its monthly pricing to customers, users will continue to seek out less expensive alternatives, which are clearly on the upswing.

What Exactly Are We Cutting If We Cut the Cable Umbilical Cord

Subscribing to the ATT 200 channel level of service doesn’t make us mac-daddy channel watchers- yes, there are 300 and 400 channels to consider- but it’s certainly a lot of channels considering only one is watched at a time.  Many of the channels are available in both regular and high definition, or HD, programming.  The four major broadcasters (CBS, NBC, ABC, FOX) all offer both HD and non-HD programming  as do other broadcasters.  All in calculation for cable is about $5.50 per day, so as much as a venti-latte.  

Our issue:  we are tending to watch too much of the channel guide and not enough of the actual programming. 

Our challenge: to optimize what we’re watching and improve the viewing experience, while maintaining, or lowering, the cost per program watched.

Analyzing Television Channels We Actually Watch

I realize that this has been mentioned before, and I’m sure it also resonates with you: we end up surfing a ton of tv waves.  And, it just gets old.  Instead of surfing channels for hours where we end up watching nothing, we’re going to maximize the viewing.  This means the right amount of time for entertainment, information, pleasure, whatever.  A little analysis can go a long way in finding the right solution to this tv watching dilemma.  No more surfing tv waves, let’s ride a few waves of programming we want to watch.

Generally speaking, we’re into numerous sporting events, lifestyle programming, health and wellness programming, children’s programming (for the kiddies, of course), reality programming, documentaries and movies.

·         Television series

·         Lifestyle programming and reality programming- History Channel, Travel Channel, Bravo, Food Network, and then

·         Financial programming - including Bloomberg and CNBC

·         Documentaries – Current tv, History Channel, the 4 majors, Public Broadcasting

·         Movies from dramas, suspense and documentaries, comedy, you name it

·         Sports programming - including college football, golf, some basketball, baseball, and other major professional sporting events like the Super Bowl, World Cup, Stanley Cup (go Flyers!) and Tour de France, among others

Cable Channel Audit/Review

Over several weeks, we did an audit and wrote down all of the channels where a program was watched.  The 20 total channels of television programming for us came down to:

ABC	NBC	CBS	FOX	ESPN
CNBC	Bloomberg	Bravo	Public Broadcasting	Nick Jr
Travel Channel	History Channel	Food Network	Discover	CSS
Golf Channel	Nick Jr/Nickelodeon	CNBC	Current TV	TBS
A&E	TNT	Versus	CNN	BBC

Have to admit that it’s a little hard for me to believe at this point that MTV and VH1 are no longer on my list.  I guess it’s a rite of passage into real adulthood or should I say parenthood to see that Nickelodeon now makes the list, while MTV and VH1 have been relegated to the recycle bin.

Remote Control Surfing

It’s amazing that among 200 channels with hours of programming, we probably watch, on a regular basis, less than 15 channels fifteen in earnest, or less than 10% of the total channels we have in the cable plan.  In surfer’s lingo:  the rest of the channels operate as remote control wave riding until we find the ‘perfect wave’.

Researching Ways to Watch Individual TV Programming Channels

A quick online search on several websites shows that there is ample availability of each channel for our reviewing needs.  hulu.com currently has a deal to offer plenty of options for viewing both major broadcaster content and smaller, niche content creators.  In fact, search for some of the more obscure programming or content creators that you can think of through either Google or hulu and you’ll be surprised at what is available.  The basic viewing can be done on a computer, while premium services let consumers watch programs on your HDTV.  

Watching Movies Through Internet TV

One of the fastest growing markets is movie viewing through a broadband connection without the need for a cable connection.  Netflix, the clear leader in the US market for movie and premium channel viewing, lets users watch content through stand-alone boxes which does not require cable subscriptions.  If users want to keep their cable, Netflix acts as a supplement to what’s available there.

Viewer Options for Live Sports Programming

The one area that seems to be a hold out is live sporting events, which are dedicated to the four major broadcasting networks.  This could be because the bandwidth required to pipe in an HD game to millions of homes in real-time is intense.  There are two solutions though – one is ESPN3, which broadcasts games live.  Users would have to connect their computer directly to their television to watch the programming.  The other solution to the sporting dilemma is using an antennae because major broadcasters broadcast over the air in both traditional and HD.    

First Internet Only Device Review

We are going to dip our toe into the cable-free world and analyze the Roku box.  This is our first foray into the internet tv ready devices and we will keep our cable subscription live and going for comparative purposes.  Stay tuned.

Riding A Cable Remote Control Wave Towards Going Cable Free- Step 1

Following the adventures of a regular urban gal and her family in their
Quest to Improve TV Viewing Options

It’s been happening for a while. It’s something we couldn’t- or didn’t want to- recognize.  It had pretty much become habit.  Some might call it an addiction.  Thankfully it’s not something that could cause irreparable damage to anyone.  Well, what is it? It’s the remote control wave ride that I and my husband have been taking every night trying to find something to watch on television.  And, because this happens so frequently, it’s become a problem. 

So, what to do about watching nothing, yet trying to watch something?  And how much are we paying for this remote control wave ride anyway, given that we’ve rarely been actually watching anything on cable from start to end, unless we specifically recorded it on the DVR.   Our actual cost per program watched must be pretty high and, thus, becomes a relevant decision point. 

Considering Cable Costs

Living in the city, cable access has tended to be the most cost effective for us.  That, and we didn’t want a satellite dish attached to our house.  But, for full disclosure, we’ve looked into Dish, have been Comcast customers, and are currently ATT U-Verse customers.  With three HDTVs, including one HDTV box, our bills have ranged between $195 per month for Comcast services to $145 per month for ATT service.  Net net over the past few years, it seems that the costs have been coming down or stayed the same even as more channels are now available.  These bundled rates include internet access at a speed of up between 12-15Mbps of internet service.  We removed the phone service more than a year ago, relying on our mobiles instead.  Phone service probably cost us about $30/month within the Comcast bundle, which is when we had home phone service.

Interestingly, the topic of going cable free has also become a conversation subject stirring among early adopters of technology.  With the digital conversion of broadcast content, the idea that someone could convert back to an antennae is actually prompting some serious interest out there.  But for acknowledged “tech geeks” or early adopters, the idea that broadcast is as good or better than cable is a huge game changer in the industry.  So my big question is:  Is it possible that we can find all of the content we watch over the airwaves and by using some Internet TV?  Or can we just go the Internet TV route and leave the antennae behind for goo?  Or, more likely, what is the right combination for us that unlocks our access to television programming how we want it and when we want it?

Now Back to Our Regularly Scheduled Program

The first step in my quest for a new television watching experience – either going internet tv only or cable-free and internet tv, we had to first analyze what we watched.  We considered the programs recorded on our DVRs, ‘live’ programs, movies and sporting events, children’s programming, the on demand programming and other additional services like Netflix.  We also considered what we would like to watch beyond typical television, movies and sporting events, including friendly suggestions for us to watch premium channel shows (Tudors or Weeds anyone?).

What we came up with boils down to a few cable channels among the multitude that is currently available.  Some of it was surprising, but most of it was what we’d expect when we peeled all of our watching down to the actual programs we like.  I’ll share these with you next time and show you the data behind it too.  

This project also attempts to address the newest craze among tech junkies going for an Internet TV pure play.   Are we there yet? 

Next week: A basic audit of what we actually watch on cable