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YOUR MONEY: Is 2013 the year to cut the cable cord?

Source: Thomson Reuters Foundation - Wed, 9 Jan 2013 15:59 GMT
Author: Reuters
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By Heather Struck

New York, January 9 (Reuters) - Like many people paying bills in January, Brad Hill is thinking of eliminating household cable service. "It is an active discussion in my house," he says. Hill, a freelance writer and former vice president of audience development at AOL, still pays the ${esc.dollar}128 monthly fee to his Time Warner Cable provider in part so his wife can continue watching one of her favorite channels - HGTV.

This year might be the one in which more people ask: How much am I paying for all these channels, anyway? And why? With the growth of broadband streaming video and its pay-per-show approach, the idea of paying ${esc.dollar}50 to ${esc.dollar}150 a month for 1,000 plus channels via a neighborhood cable provider is no longer a slam dunk.

The cable industry that used to move in one direction -- up -- is now losing subscribers who opt for less expensive and more targeted broadband services. Comcast Corp., the largest U.S. cable provider, said it lost 117,000 video customers in the third quarter of 2012.

The firm still has more than 22 million paying customers, but the loss shows a change in direction. According to the Nielsen Company, the number of U.S. households subscribing to pay-TV services declined by 1.5 Percent, or 1.5 million, in 2011.

The Internet-streaming alternatives - Netflix, Amazon's Prime, Hulu and Apple Inc.'s iTunes are leaders - have content that is less predictable than cable television, but it is also more efficient, with customers often paying per episode or show, instead of for the whole big multi-channel menu.

Here is how you should review your family entertainment budget for 2013, and how to manage it.

PAY FOR WHAT YOU WATCH

It's hardest to give up cable if you love sports, news or other specialized offerings (like that addictive HGTV) that cable reserves for itself. And if you are hooked on a particular new show, don't expect it to be readily available everywhere else -- or maybe anywhere else.

The first step is to make a list of what you want to view, find each program and its cost.

Recent episodes of many shows are available on services like Hulu Plus (${esc.dollar}7.99 per month) and iTunes (starting at ${esc.dollar}1.99 per episode), but the chances that every desired program is available through one provider are slim. When one goes to Hulu and searches for the latest episode of the CBS program, "How I Met Your Mother," for example, disappointment follows. The show is available on CBS's ad-supported website, but it is not available on all streaming devices.

If you want to watch old and new episodes of a show, you may need more than one service. For example, fans can find the first four seasons of the AMC series "Mad Men" on Netflix, and watch all of them in a snowy weekend or two. However, a fan of the show would have to use another service, like iTunes or Amazon Prime, to watch current episodes of the program, which are available one day after the air date.

SPORTS AND NEWS ARE SPECIAL

While many sports events are streamed online, fans who want to consume a lot of action across multiple teams or sports, or who want to save games for later, are probably best served by sticking with their cable provider. However, for people who never switch on the football game, the sports channels are part of what makes the cable bill so expensive.

Cable sports account for about 20 percent of the fees that providers must pay to carry channels like Disney's ESPN and ESPN2, according to Bernstein Research analyst Craig Moffett. Those fees are passed onto all customers in subscription costs, including the sports indifferent.

Those who want to simply stream one team or one sport or one game should hunt for the smoothest running service, like fromBAR.tv; they aren't found at the usual show-streaming providers.

News hounds face the same quandary, because you can't get 24-hour news from a station like CNN without subscribing to a cable package. CNN allows users to stream live audio from its broadcast, but no video.

CHOOSING YOUR HARDWARE

If you still want to watch on your big-screen TV and not limit viewing to your computer, tablet or phone, you'll need to spend more money on hardware, too. Many new TVs are Internet enabled; they can run Netflix, Hulu or Google TV.

Others require an intermediary box, like a Roku (${esc.dollar}49.99-${esc.dollar}99.99) or a Boxee (${esc.dollar}99), that you'll have to wire to the TV. (One more reason for technophobes to stick with tradition; streaming services won't send a cable guy if your system stops working).

You can even hook up your laptop to your TV, and your added investment would be limited to a couple of cables.

Finally, once you've made all these decisions, you will likely have to re-evaluate, again and again. The cable industry is constantly working to stay out front of the alternatives, and may continue to block first-run episodes from appearing outside subscribing households -- or find other ways to discourage cord cutters. For example, NBC reserved a lot of its streaming Olympics content last summer for those viewers who were already cable subscribers.

"It is definitely too early or uncertain for most people to switch," says Hill. Once his wife can stream HGTV all day, though, it might be time.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of the Thomson Reuters Foundation. For more information see our Acceptable Use Policy.

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