When 'Cutting the Cord' Isn't Worth It

Sometimes, I think the editors of Consumer Reports read our newsletters.

The reason is that we tend to beat them to the hottest topics our subscribers want to read. The latest example involves the trend of "cord cutting" – folks ditching their cable TV subscriptions.

I first wrote about this four years ago in my Retirement Millionaire newsletter. And it's no wonder folks started leaving in droves. For decades, people have hated cable companies.

Businesses like Comcast, Verizon, and Charter Communications have created government-sanctioned monopolies or duopolies that rip us off with sky-high fees. And we paid because we only had one place to watch.

But once people had options... millions of them walked away from cable...

According to Bankrate, 33 million Americans have canceled their cable since 2010. And it's clear many of them have moved to streaming. According to Deloitte's annual Digital Media Trends survey, the average U.S. consumer subscribes to three video-streaming services. These streaming services are Internet-based ways to get specific content for a much cheaper price.

But lately, the trend has slowed. Cable companies are hanging on to more of their users... and the financial benefit of cord-cutting isn't as clear as it used to be.

When we first wrote about cord-cutting in 2015, Netflix was $12 a month, Amazon Prime (which includes video streaming) was $79 a year, and Hulu had a free ad-supported option. Today, Netflix ranges from $8.99 to $15.99. Amazon raised its Prime price to $119 a year. And Hulu's ad-supported version? That'll cost you $5.99 a month.

Amazon, Netflix, and Hulu are still three of the biggest players in this market, but they have some serious competition now. That includes Sling TV, YouTube TV, and individual channel streaming services like CBS All Access and Disney+ (coming this fall).

Want premium channels like HBO or Showtime? That'll cost you at least another $5.99 per month. It's even more if you don't have a cable subscription and subscribe to their standalone services... HBO Now is $14.99 a month and Showtime is $10.99.

Want to enjoy live sports? You're mostly out of luck unless you have a service like YouTube TV that allows users to watch events in real time, so-called "live streaming." Even then, local sports might be blacked out in your area. For example, here in Baltimore, you can't watch an Orioles game without traditional cable.

However, for folks who want most of what cable offers without all the added fees, contracts, equipment, and terrible customer service, a streaming service is the better option. And it's likely the cheaper option in the long run, too.

If you're not ready to quit all at once, try an antenna. I'm not talking about the old-time rabbit ears... Today's antennas can pick up high-definition local broadcasts and transmit them to your TV without a cable hookup. That means you can watch most of your local channels... including networks like CBS, NBC, Fox, ABC, and PBS. So you wind up saving money and cutting out the overwhelming number of channels. I have a feeling once you take away the hundreds of cable channels, you'll be surprised at how little you miss them.

One of the most popular models is this ultra-thin flat antenna from AmazonBasics. It usually retails for about $20. But beware before you buy... You must check the broadcast signal where you live. You can check your zip code on the Federal Communications Commission website to find what channels you can pick up over the air in your area and what antennas would serve you best.

If you decide to use a streaming service, you can watch most of the content on your TV. Lots of TVs now are "smart" TVs that connect to your Internet and run streaming services.

If you don't have a smart TV, I think the simplest and easiest hardware option for streaming is a Roku. For years, I've given them to friends and families around the holidays. This small device, about the size of a hockey puck, plugs into your TV and connects to the Internet. It allows you to control your subscriptions to most of the major streaming services and includes free channels like YouTube and music streamer Pandora. Even better, Roku also makes a smaller, more portable plug-in stick. My assistant Laura has two and loves their usability.

Apple, Google, and Amazon make similar boxes and plug-ins, but I like the Roku's ease of use.

There are a few questions to consider before you cut the cord, which I've covered Retirement Millionaire. If you have a subscription, give it a read here. And if not, get started today.

Have you cut the cord or stopped watching TV as prices have soared? Do you think the days of regular television are numbered? We'd love to hear about it. Drop us a line at [email protected].

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 8, 2019