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Steve Rosenbaum

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Cutting the Cord: The Hidden Costs

Posted: 11/13/2012 11:16 am

It is all my wife's fault. More than a year ago, after I'd written a number of blog posts about the importance of choice in video and the fact that cable was dragging their feet in the a la carte world, she called my bluff. "OK, if you're so sure there's better stuff on the web than on cable, why don't we cut the cord and find out?" She dared me. Duh, I can do that. No sweat. And so our adventure began. We called Time Warner and said boldly -- "Please cancel our cable -- today." Snip. Gone.

Immediately, our Tivo was lonely. No more repeats of Law & Order. No more Nightly News. No more more Mad Men. Wow, a cold video breeze blew through the entertainment consumption patterns we'd fallen into.

Today, more than a year later -- we've recovered. We've reinvented how we discover, consume and share media. But, a word of warning. It wasn't easy -- and it wasn't cheap. Yes, we pocketed the bulk of our Time Warner bill (we dropped from $130 to just $33 for broadband). But did the $97 a month go to VOD or other subscriptions? Sort of. And what about hardware? Ugh, OK hold on for some sticker shock there.

So, let's break down the actual cost of 'cutting the cable' -- and then I'll tell you if I think it was worth it.

1. The Gear
2. The Subscriptions
3. The Time

First, The Gear. Once we decided we needed to be able to connect our screens to the web, a bunch of technology we thought was just fine turned out to be a bit out of date.

Somewhat surprisingly, we found our flat screen, while looking great, didn't have HDMI. And it turns out that HDMI is now the connection to everything. We tried an HDMI converter. No dice. So we were off to shop for a new flat screen (Panasonic -- 42″, $979.86). Then, we needed a receiver that would control HDMI devices. After some experimenting, we settled on a Pioneer VSX 1122 ($599.99) which had a great iPad App. Then, the old WiFi router had do go. Replacing a 'N' router with a 'G' -- new Linksys EA3500 ($107.07). And despite the fact that our apartment isn't that huge, we needed a WiFi extender for the bedroom Amped Wireless Smart Repeater ($64.99). So, just to get the web to talk to the TVs, we're in $1,751.91

Now, I'm excited to say that HD live TV over the air is AMAZING. But to make that work you need a snazzy HD antenna. One for the living room (Terk HDTV Hi-Ef Antenna $39.95) and one for the bedroom (Paper Thin Leaf Indoor HDTV Antenna 39.98).

Next, devices. Apple TV needed an update. $99, and we added Roku, a new Tivo, a Google TV, and a new web-enabled DVD Player. Some of those boxes came from conferences and other sources, so it wasn't all cash out of our pocket -- but all in another $200 or so.

And then, Subscriptions. Netflix (a must) online only -- $9 a month ($108 a year), Amazon Prime (to get 'free' prime video) $75 a year. So far we've not bit the bullet on Hulu -- but who knows.

So, the idea that cutting the cable was going to save money turned to be wishful thinking. Yes, we saved $1,164 on cable. But year one costs of hardware and subscriptions totaled $2,113.84 so we have a year one net loss of $-949.84, and that was BEFORE we spent a dime on VOD movies, downloadable TV Series or the content. Now, maybe we didn't need to buy all that gear -- but the simple fact is that there IS a hardware cost in shifting from a cable box with a coax connection to a web-ready IPTV setup. So don't think it won't cost you something, it will.

The Value. At first, the experience was less than ideal. Sure the Tivo over the air recording was awesome, but that was just ABC, NBC, CBS, PBS and Fox. Going backward was weird. As I've written about before, iTunes downloads are hinky and slow. The quality of Amazon Instant Video is inconsistent and Netflix, while awesome on tech and UI, seems to be getting less of the new movies and TV shows. Interestingly, Roku often ends up with the best options.

And, slowly, our a la carte TV diet is emerging. We now watch some broadcast TV on Tivo (NBC Nightly News, ABC, 30 Rock, The Last Resort, Elementary, Blue Bloods), but Tivo also delivers tech video from WSJ's Walt Mossberg, The Apple Bite (CNET), This Week in Google on TWIT.TV, and more. And yes, we're buying programs and series from iTunes (Mad Men) and Amazon Instant Video (Homeland). And then there are movies, we do buy them more now. But the biggest surprise was AMC's Fandango. For $25 a year we've got a Fandango membership, which allows free movie ticket online purchases and upgrades to popcorn and snacks. So, part of our 'a la carte' routine is we're going to the movies more.

In summary -- the entertainment and information universe is expanding rapidly. And thanks to new technology and broadband, the on demand a la carte world has arrived. It isn't easy, it isn't cheap -- but it does offer choice and high quality narrowcast options.

The next big thing around the corner is the new Boxee Box with live TV and DVR capacity built in, and the new Tivo box (XL4) and the Tivo Stream add on. The Tivo seems to be shifting to be focused on adding functionality on top of cable. Sadly, the XL4 only works with cable -- no over the air digital input is allowed. The Boxee.tv box is targeted to cord-cutters, with a $99 price point and a $14.99 a month subscription for 'unlimited DVC' capacity.

We'll have to see which way the market goes, but my guess is that more and more cable series are available as an annual subscription, the cord-cutters will continue to grow. After all, consumers like choice.

 

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