As technology evolves, people are jumping at the chance to cut the cable cord and move to internet-based TV and movie streaming platforms. But are these alternatives really a cheaper option, and if so, how much money could you actually save?
If you’re considering cutting the cable cord to reduce costs and live on less, this post dives into precisely how much it can save you.
Consider hidden costs of cutting the cable cord
Before canceling your traditional TV service, review your contract to see if there are hidden costs that may be implemented for doing so. If you signed a contract with your cable or satellite TV provider, will you incur any cancellation costs for terminating the policy early?
In the event that you bundle multiple services, such as your TV, phone, and internet, you may lose out on the bundle savings most companies provide as incentives. This could cause your phone or internet bill to increase, even though you’re saving money by not paying for cable TV anymore.
Speaking of internet, when switching from traditional TV to streaming services, your internet bill could increase, too. Why? Because you may need to purchase additional data every month to compensate for the fact that you’ll be accessing all your entertainment online.
Additional equipment may be needed
It’s true that cutting the cable cord can often save you money, but it’s not always guaranteed. There may be additional equipment you need to purchase in order to switch services.
Netflix only costs $7.99 per month — that’s loads cheaper than your $60 monthly satellite bill. But if you want to watch online subscriptions directly on your TV, you’ll likely need to purchase a separate product that allows you to do that.
Devices like Roku, Chromecast, and Apple TV all allow you to access the internet on your TV. With prices ranging from $30 to $200, there’s something to fit everyone’s price point.
These devices do not require a monthly subscription, so you only have to pay this fee one time. Though you can find a relatively cheap device, it’s an added cost that’s important to consider before you cut cable.
Cable TV alternatives
If you plan on replacing your cable with online options, you’ll need to do some shopping around to see which price point and plan makes the most sense for you. Here’s a sampling of the most popular services to consider.
Cost: $8 to $12 per month
Unlike live-TV watching services, Netflix is all about on-demand movies, original programing, and past seasons of your favorite TV shows. You can binge watch them as often as you’d like, but you won’t be able to watch seasons of shows that are currently on the air.
Netflix can be streamed on your home Blu-ray player, computer, laptop, smart TV, or on devices like Roku, Chromecast, or gaming consoles.
Cost: $8 to $12 per month
Hulu Plus is the premium version of the previously free online movie and TV-streaming service. You pay a monthly recurring subscription fee to access current and past season TV shows, greatest hits movies, and add-ons like Showtime.
With Hulu Plus, subscribers can stream current-season episodes and movies on any computer, tablet, game console, Roku, Chromecast and Amazon Fire TV.
Amazon Prime Video
Cost: $11 per month, or $99 a year
Amazon Prime Video features channels like PBS and Starz as well as an entire library of 40,000+ movies and shows to watch on-demand. The best thing about Amazon Prime Video is that it’s included with your regular Amazon Prime subscription.
Cost: $20 to $40 per month
Owned by Dish Network, Sling TV’s service allows you to choose your own channel packages with live access to local stations like CBS, NBC, ABC. You can also upgrade and customize your package with custom add-on stations like ESPN, HGTV, and HBO.
The basic Orange package starts at $20 per month and includes 25 channels, while the premium plan costs $40 per month and includes about 50 channels. Sling TV must be streamed on devices such as Roku, Chromecast, Xbox, and Amazon Fire TV.
Cost: $40 to $75 per month
Initially offered to customers who own a PlayStation console, PlayStation Vue now allows you to enjoy live TV, sports, movies, and news stations of your choosing. It includes all the main channels plus stand-alones like HBO and Showtime.
PlayStation Vue is not only available for streaming on PS3 and PS4 consoles, but can also be accessed via Roku, Chromecast, or Amazon Fire TV devices.
Putting it all together
You’ve checked for hidden costs, bought a new device, and decided on your streaming platform. Now what? Use this formula for calculating exactly how much you’ll save the first year after cutting the cable cord:
Monthly cable bill x 12 months = Yearly cost of cable
Replace TV channels with internet alternatives = Total streaming services
Cable cost – total streaming costs = Savings
Savings – cost of new equipment – hidden costs = True cost of savings
Below is an example of the true cost of savings after your first year of cutting cable. This is based on the $103 average TV bill in 2016, along with the cheapest streaming options and an average internet bill increase of $15 month.
$103/month x 12 months = $1,236 per year
Replace with Netflix ($8/month), Hulu Plus ($8/month), and Sling TV ($20/month) = $432/year
$1,236 – $432 = $804 in savings
$804 – Chromecast device at $35 – $15 internet increase/month =
$589 per year true cost of savings
It’s clear that cutting cable can save you some big bucks — even if you subscribe to multiple streaming platforms. However, do the math with your budget and see exactly how much cutting cable can actually save you.
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