08/29/2022

Cable vs Streaming, Which Is The Right Choice For You

Insights

12 min remaining

More content is being consumed as more people stay home. As streaming users have more options, the debate about cable vs streaming continues. However, cable subscribers are losing their support.

Many people are cutting the cord because they see that streaming multiple services is much cheaper than traditional cable.

Only 20% paid more than $50 for streaming services, while the average cable bill was around $200. Due to the coronavirus pandemic movie theaters are suffering and movie releases are slowing down, so people prefer to wait until a movie is available on a streaming service to view it.

Megan must make a decision. It’s Tuesday evening at 8:00 pm. It’s been a long day at the office.

She waited all week for the new episode of “The Bachelorette”, and tonight, the finale will air on ABC.

You can watch the finale tonight, or wait until tomorrow to catch it online on Hulu.

She turns on the TV and a loud TurboTax advertisement suddenly shouts “Guaranteed Savings!”

She sits up on her feet, grabs the remote and clicks from cable TV into her Hulu .

She decided to stream tomorrow’s finale without commercials and to watch past episodes of “The Bachelorette”, tonight, to see if her intuition can help her determine the final rose recipient.

Cable providers are struggling to stay relevant in the age of streaming platforms. They have high prices and interruptions from commercials that interrupt the content experience.

Consumers continue to ask the question of what is better: streaming or cable? The answer is becoming increasingly streaming.

Our research revealed that streaming services are significantly cheaper than cable. This is an incentive for subscribers to cut the cord.

However, the streaming market is highly competitive for businesses looking to transition from cable television into streaming. People don’t want to pay the same price for streaming as for cable.

Movie releases are also taking a hit as people abandon expensive media-watching options. This is because consumers are less motivated to rent movies or go to the cinema. Subscription services offer a lower cost library from the comfort of consumers’ homes, so people aren’t willing to pay more for the same experience.

Media companies need to find ways to make money and satisfy their customers in the ever-growing debate about streaming vs cable.

Our findings

  • A third of consumers (39%) pay $11 to $25 per month for streaming services. This is significantly less than the average cable bill. Only 20% of streaming subscribers pay more than $50 per month.
  • 50 percent of people pay for streaming services. Only 16% pay more than three services. This is a bad sign for new services.
  • As 42% of respondents say they don’t want to watch any new movies, consumers prefer TV to film. 18% will see a movie if it’s included in their subscription.

Three-Quarters pay less than $50 per month for streaming services, far less than the average cable bill

The debate about streaming services vs cable is one that has to be resolved by reducing the cost.

Streaming services are becoming more popular as people have less need for expensive cable packages.

Many customers no longer need cable because streaming services like Netflix, HBO Max and Amazon Prime Video invest heavily in original content selections.

The average monthly household cable bill will be around $217 in 2020. 73% of streaming service users pay less than $50 per month, which is more than $150 more than cable packages.

It is clear that 39% of streaming service customers pay only $11-$25, while 24% pay between $26- $50.

Only 20% of people spend more than $50 for streaming services

Cable is not considered a standard for TV viewing, but is instead viewed as a luxury option for many millennials. The trend towards cutting the cord may be a growing one, with Hulu streaming broadcast TV episodes within a day of their release and Amazon Prime Video and Paramount Plus streaming sports games live.

Consumers are enticed to buy cable because of the value of sports. There are many streaming platforms that offer live streaming of sports, so that is no longer a factor in the debate about streaming vs cable.

For years , major television providers have been losing millions to customers. In 2018, pay-TV providers lost 2.87 million net customers. Cable providers had lost 4.5 million subscribers in the first quarter of 2019. This is due to the competition cable providers face with streaming service platforms that are growing rapidly.

Cable companies will continue to see a decline in subscribers in 2020. COVID-19 is affecting their sales. Netflix added 16 million customers in Q1 2020, while major pay TV providers lost 1.6 millions subscribers.

Subscription prices are often much less expensive than the cable bill, which averages around $200. Here are some streaming subscription prices.

  1. Apple TV:Basic Subscription is $4.99/month
  2. HuluBasic Subscription is $5.99/month 
  3. Disney+:Basic is $6.99/month
  4. Netflix:Basic is $8.99/month
  5. Amazon Prime VideoIncluded with yearly Prime membership ($12.99/month).
  6. HBO Max Basic Subscription : $9.99/month
  7. Peacock: Free (Basic subscribe for $4.99/month)

People pay less for all of these services than their monthly cable bill, even if they add them together.

Consumers are less likely to subscribe to a cable package if their cable bills rise in order to make up for lost customers.

The majority of consumers only invest in one to three streaming subscription services

It is a challenge to become a top streaming service. The industry’s dominant players include Netflix, Amazon and HBO, Apple and Disney. This leaves little room for other platforms.

Over three quarters of all people (76%) use at least one streaming service.

26 percent of people pay for one streaming service. Half the population uses 2 to 3 streaming services.

Only 16% subscribe to four or more streaming platforms, which indicates that users want to keep streaming costs low.

If you stick to just a few platforms, streaming can be cheaper than cable.

Streaming Services Facing Tough Competition upon Entry to the Market

Given the high price, streaming services will struggle to compete with the 3 most popular platforms, Netflix, Hulu (owned and operated by Disney) and Amazon Prime.

These three giants hold the majority of the market. However, Apple TV and Disney+ are also making a difference. Since its launch in November 2019, , Disney+ has attracted 28.6 millions subscribers. This is a remarkable feat in such a short time.

Disney+ is still a big name in streaming. Disney+ is able to host a huge fan base and already has all its content, which gives it a significant advantage.

Disney owns Marvel, Star Wars and all the Disney classics that parents watch with their kids.

Apple TV+ has had much less success than it did when it first entered the market in November 2019.. Although Netflix and Disney+ have the advantage of having a lot of original content, Apple TV+ was not able to make a big splash until the August 2020 release of Ted Lasso.

In 2020, less than 10,000,000 customers had signed up for Apple TV+’s 12-month free trial. This is just 10% of Apple’s eligible buyers. Apple has 1.5 billion Apple devices worldwide, so it already has a large customer base who is familiar with its products. Apple expected to see a return from this large customer base. Instead, Apple received only a small percentage of subscriptions from its base.

Apple might need to reconsider its streaming strategy, even though Disney+ has made great strides over the past months.

Quibi is a streaming service that focuses on short content and is an extreme example of failure.

Quibi bet on viewers wanting to see short-form TV programs or movies, rather than long-form content. Quibi spent $1.8 billion to launch a mobile-only platform that allowed people to view high-quality media in bite-sized segments.

Quibi launched in March 2020. It offered users a free 90-day trial to test its platform. Quibi was a victim of the streaming market , less than one year later.

Quibi entered a market where consumers have hundreds of hours to watch content on their phones, computers, or TVs. Quibi decided to do the opposite and offer short content exclusively on mobile devices. It failed to succeed.

The competition between Netflix, Hulu, Amazon and Disney is making it harder for smaller streaming companies to succeed. While Disney and Apple can afford billions of dollars to enter the streaming market, small businesses have less margin for error.

Media businesses must be on the top three streaming platforms, as most people only pay for one or three services.

Nearly half of people say they have no interest in new movie releases

As people are less interested in new movies, they are losing revenue from movie theaters. Instead, they prefer to stream and watch TV at home. This revenue loss has been magnified by the closing of theaters because of the pandemic.

Streaming services have opened up a new way for people to access media at any time and for as long as they wish. This is commonly known as binge-watching. It reflects the expectation that people will be able to view entire TV seasons simultaneously and multiple films at once.

This popular trend has led to a decline in movie-going behavior and decreased motivation to see movies in theaters.

Nearly half (42%) of respondents to a 2020 survey said that they were not interested in seeing any new movies.

Only 10% of respondents said that they would stream a movie for the same price as traditional movie tickets.

19% of respondents said that they would pay more for a movie than a ticket. 18% stated that they would only view a new movie if they had a streaming subscription.

Movie theaters are experiencing a decline in revenue as streaming continues to increase. The box office experienced a 9.9% drop in revenue in 2019, a substantial amount considering the year’s huge hits like “Avengers: Endgame”, “Frozen II,” or “Star Wars: The Rise of Skywalker.”

Hollywood is also concerned about how movie theaters will bounce back following the COVID-19 pandemic. The complete closure of movie theaters could signal the end of the communal viewing experience, as they are already losing viewers.

With the pandemic, some studios have tried to gain back their lost revenue by offering a straight-to-streaming movie experience. This model offers viewers an exclusive viewing experience with new movies at a premium price of $20 per 48-hour rental.

Universal achieved great success with this model when it launched “Trolls World Tour” (April 2020). Trolls World Tour broke the digital opening record and earned 10x more revenue than Universal’s previous record-holding digital closing for “Jurassic World: Fallen Kingdom” September 2018.

Universal’s success shows that people are willing to pay more for movies if it is a film they truly want to see.

Warner Bros. made arrangements to release films in theaters simultaneously over HBO Max. Although the decision was not a win for filmmakers it was a big hit with new subscribers and fans of HBO Max.

Film studios must be creative and flexible in their pricing and release plans, as only 10% of movie-goers will pay more to stream a movie than they would for a regular movie ticket.

Streaming trends suggest that cord-cutting is the new standard for households looking to cut their cable bills.

Nearly three quarters (73%) of people pay less than $50 per month for streaming services platforms. This is significantly lower than the average cable bill which is approximately $217.       

Cable companies experience a loss of subscribers but the streaming-service market is becoming more competitive.

  • More than three quarters of the population (76%) only pay one or two streaming services.
  • Only 16% of subscribers (or 16%) will pay more than three streaming services. This means that streaming companies must be among the top three most popular.
  • New streaming services are more difficult to compete with when they don’t have millions to spend on marketing or make mistakes.

Additionally, the traditional movie-going behavior has changed due to binge-watching or streaming. People enjoy the convenience of streaming content from home and are less inclined to pay for tickets to the cinema, even though the COVID-19 pandemic has passed.

Nearly half (42%) of respondents said they were not interested in new movies, while 18% stated that they would watch new movies if they had a media subscription.

Streaming platforms have transformed U.S. viewing habits. Media companies need to figure out how they can best compete in this market.

About the author

Kobe Digital is a unified team of performance marketing, design, and video production experts. Our mastery of these disciplines is what makes us effective. Our ability to integrate them seamlessly is what makes us unique.