For savvy media consumers wanting live sports and the traditional TV experience, saving money just got a little harder.
Streaming live television services (or virtual MVPDs) have largely been marketed as a frugal alternative to the traditional cable pay-TV bundles. These services differentiate themselves from on-demand streaming video services like Netflix by offering live television, including sports, and a channel surfing experience.
Despite the promise of streaming services offering pay-TV at a cheaper rate than cable or satellite TV, recent price increases and the lack of bundling deals with broadband suggest the average virtual-MVPD subscriber is no longer saving money versus a cable TV plan.
On December 23rd, DISH Network owned virtual-MVPD/streaming television service, Sling TV, announced rates for all plans would be increased by $5/month. Just days before, Hulu with Live TV increased the price of its streaming TV service by $10 to a hefty $55/month. AT&T TV Now recently raised the cost of entry for its basic package to $65/month, a $15 price increase.
While the companies offering these services cite rising programming costs as the reason for the rate hikes, consumers may start questioning the value of these alternative TV services—especially as the "streaming wars" pipe more and more on-demand content (and live TV, including sports via ESPN+, etc.) into living rooms.
The costs of these services keep rising however, and even sports-centric streamers may have to reexamine whether their significant monthly outlay is worth it. To examine whether virtual-MVPDs are still a frugal choice for linear TV consumers, we used M Science data to track the spending of different groups of cable and virtual-MVPD customers.
All streaming services, whether linear or on-demand, require a high-speed internet connection. Generally if not getting their internet through their apartment building, cell phone provider, school, or other institution, Americans will buy their broadband from cable companies. Fortunately for these companies, until 5G invades every facet of our lives as promised or high-speed internet is beamed to the masses from satellites, these broadband customers are a loyal, if not captive, market.
When looking at the monthly spend of different groups of cable customers, M Science data shows that cable customers who also subscribe to a virtual-MVPD service spend significantly less on average on their cable bills reflecting the higher mix of broadband-only customers.
However when combining that cable bill with the spend on the virtual-MVPD, our research shows that the total average monthly spend on these combined products has been greater than that of the average cable customer since 2018. Additionally, this gap widened quickly in our data, reflecting the fast, consistent growth of streaming-TV rates since 2016.
As the prices of virtual-MVPDs climb however, will consumers stick with the streaming option, or will they find more value in returning to a traditional television bundle through their cable provide? Or more direly for both businesses, will they ditch linear TV altogether for streaming video on-demand services instead?
For all the latest subscription media analysis and estimates, please reach out to firstname.lastname@example.org to stay up to date on company- and industry-level trends.