Is It Time to Drop Cable TV for Netflix, Hulu Plus and Antenna?

According to an article at the Financial Times (which we won't link to since you have to pay to read it) research firm SNL Kagen reported that cableTV has suffered its largest customer drop in the past 30 years. We're talking big numbers. The drop, which numbered 741,000 over just the third quarter seems to indicate that consumers are jumping ship for Internet, web-based solutions over traditional cable. The article indicates that it's simply a younger, more tech-savvy crowd leading the charge, but we have an alternate opinion, and one we've been putting forth for over a year now in articles and personal evangelism: CableTV is expensive. That's right, paying over $100/month for TV and Internet is fine when the economy is going strong and your job is secure, but when it tanks, overpriced cableTV - let's face it - should be one of the first things to go.

While I know several people who won't jump ship, largely because they watch channels which are as-still unavailable through outlets like Hulu or Netflix, most of my personal crowd of friends watch network TV or shows that are represented on those sites. We're also not as eager to pay $60/month or more just for the privilege of watching a show a day earlier than it's available online. Heck, even if you do the math, it's doubtful I personally watch over 45 episodes of anything per month, which means that even paying $0.99 through an outlet like iTunes would put me into a situation of having a net gain.

CableTV is simply too expensive during a recession. This is made more evident by the fact that satellite and fiber providers actually added subscribers, while cableTV fell like a rock (cableTV is like the inverse of that kid in class who ruins the curve for everybody). CableTV is also technically behind some of the other available technologies. Take DISH, for example, they have direct integration with Google TV. Fios is introducing advanced, next-generation set-top DVRs with incredible speed, web-access, and faster on-demand. Fios is also more apt to hit GoogleTV than legacy cable boxes installed all ovr the country. While we recognize that GoogleTV isn't the perfectly polished solution it needs to be, it still represents a leap forward in TV access and web/search-integration. Want to control your cableTV box with GoogleTV? You'll have to use simple IR - and forget about advanced, future-based, DVR control from search results.

Antenna's are also becoming popular in my neck of the woods and I have set up three friends in the last year alone who are now enjoying compression-free HD television channels (all four major networks, plus 10-20 more channels) for only the cost of the antennas (check out antennasdirect.com for some excellent products).

The Cost/Features Breakdown - By the Numbers

In case you've never done the math, here are some interesting numbers. We'll take a major cable outlet (Brighthouse, think Time Warner) and run a pros and cons comparison against the lower cost alternative. We''l include the cost difference and also do our best to explain what you gain and lose by each.

Brighthouse Cable Digital TV HD DVR Package

Cost: $66.99 + $6.95 (DVR package) = $73.94 per month or $887.28 per year
Initial Costs: $35 setup (sometimes waivable)

Includes:

• HD DVR lease
• 200 channels
• NO premium channels (HBO, howTime, etc)
• NO Sports Packages

Pros

• Includes HD DVR to record shows for watching whenever
• Internet/Mobile control over DVR now available
• Most movie and TV content in 5.1 surround
  

Cons

• Freaking expensive!!!
• On-demand services cost more
• Watching on your own schedule requires setting the DVR
  

Antenna + Hulu Plus + Netflix

Cost: FREE + $7.99 (Hulu Plus) + $8.99 (Netflix) = $16.98 per month or $203.76 per year
Initial Costs: $109.99 (estimated based on ClearStream2 antenna with mount, add more for dual antenna, or amplifier)

Includes

• All 4 major Networks in uncompressed HD (ABC, CBS, FOX & NBC) plus 30+ other channels (typically CW, PBS, etc) in HD or Digital
  
• Unlimited DVD movie rentals (1 out at a time)
• Unlimited streaming movies & TV from Netflix (typically older shows)
  
• Unlimited streaming TV shows & movies from Hulu Plus (most newer network and cable TV shows)
  

Pros

• Antenna receives better HDTV signal (uncompressed) for network TV than cableTV, satellite or Fios
• Includes unlimited DVD rentals (Blu-ray for $1/mo more)
• MUCH lower monthly cost
• All TV is on-demand and accessible via Internet or mobile device via Hulu Plus and Netflix
  

Cons

• Shows like those found on specialty cable channels (Daily Show, etc) may be unavailable or require you visit a separate website
• Some networks such as CBS & CW not part of Hulu Plus, so shows are more limited and must be watched on CBS.com
  
• Requires some kind of interface for your TV (laptop, Roku, etc)
• Not all movies will be in 5.1 surround sound (5.1 now on Hulu Plus and Netflix, but not for all content)
  

Conclusion

So when cableTV numbers fall by 3/4 of a million subscribers in one quarter - what do you think the response will be? Our guess is increased advertising with little to no permanent price reductions. You see, we don't think cableTV gets it - and likely never will. It's too expensive. People know this and if they are going to pay a premium, they are going for newer and more advanced - or they are going with retro antennas plus subscription services and saving a bundle.

With the current economy, is this a place where you can drop $57 per month in expenses? We think it's no wonder cable TV is suffering. And our bet is that it's going to suffer further before all is said and done.