The big problem with streaming TV costs

If you’re looking to cut the cord you’re probably comparing a $125 cable bill with a $20 commitment for Netflix and Hulu. It sounds like a pretty good deal, but there are a few things that could go wrong.

First of all, remember that you aren’t just paying $20 for Netflix and Hulu, you’re paying for your internet too. That could be $40, $60 or more a month. But, you say, I’m already paying that one way or another. True, but if cutting the cord means that you lose “triple play” discounts, that price you pay for internet could end up going up.

Second, while home internet costs a lot of money from your perspective, it could turn into a money loser for the internet provider pretty quickly if a lot of people turn to Netflix and Hulu overnight. Chances are that your neighborhood isn’t set up for everyone to be pulling 20 or 30 megabits per second all at the same time. If you’re paying for a 100 megabit connection (which is getting more and more common) you’re not guaranteed that speed. The internet company oversells itself because they figure not everyone needs to pull 100 megabits AT THE SAME TIME. Except, if everyone is streaming then maybe they do. This means that your internet prices could go up.

That’s not the biggest issue… it’s content. Right now the content providers (the broadcast networks, ESPN, etc.) think of the dollars they get from streaming as icing on the cake. They’re making big bucks by charging the cable and satellite companies. Except, what happens when folks abandon cable? Content providers are going to try to make their money from streaming and all of a sudden you’re paying $50 a month for Netflix.

Most experts agree that streaming services are very underpriced right now and if companies like Hulu competed on a level playing field with cable and satellite for content, prices for streaming would double or triple. And we agree — it’s very likely they will. It’s just a matter of when, unless cable and satellite companies act now to tame content provider greed and keep costs to consumers low.