Should You Cut the Cord on Your Cable Company?

Should You Cut the Cord on Your Cable Company?

Cable TV is getting pricey…

• In 2011 the average pay-TV package cost $86, including premium channels

• By 2020, that cost is forecast to rise as high as $200– Who can really afford to

pay that much?

Rising Costs

Source: NPD Group, https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120410/

Cable TV is getting pricey…

• Cable channel owners keep charging pay-TV companies more to carry their content

• Pay-TV operators like Comcast, DirecTV, and Time Warner Cable pass that cost on to you!

The model’s broken!

The alternatives

• There are three big streaming video services today– Netflix– Amazon Instant

Video/Prime Instant Video

– Hulu/Hulu Plus

But you have a choice!

The alternatives

• Netflix: $7.99/month– Or $11.99/month if your family

wants to watch more than two things at once

• Amazon: $79/year for Prime membership ($39/year for college students)– Pay-per-view for content not

available on Prime• Hulu: some content is free;

Hulu Plus is $7.99/month

What you’ll pay

The alternatives

• Each has different strengths– Netflix: pay one price, large

content library, original series– Amazon: pay-per-view and

subscription offerings, large and growing content library, other perks

– Hulu/Hulu Plus: free and subscription offerings, current TV shows

They’re not the same!

Let’s take a look…

Netflix

• Got its start mailing DVDs to customers’ homes

• Created streaming video service in 2007

• Started offering standalone streaming service in late 2010

The streaming leader

Netflix

• More than 30 million U.S. subscribers

• More than 40 million global subscribers

The streaming leader

Source: Netflix Q3 2013 shareholder letter

Netflix

• TV Shows– Breaking Bad– Family Guy– How I Met Your Mother– The Walking Dead– Grey’s Anatomy– Law & Order: SVU

• Netflix also has a large collection of movies

Top syndicated content

Source: CNET, http://crave.cnet.co.uk/homecinema/breaking-bad-is-top-netflix-us-show-doctor-who-in-top-10-50012754/

Netflix

• House of Cards• Orange is the New Black• Arrested Development

(4th season)• Lilyhammer• Hemlock Grove• Marco Polo

Netflix is also investing heavily in original content

Amazon.com

• Amazon Instant Video: more than 150,000 titles available to buy or rent

• Prime Instant Video: more than 40,000 titles included with Prime membership– Prime members also get free

2-day shipping on most Amazon purchases

2 services

Let’s focus on Prime Instant Video

Prime Instant Video

• “Tens of millions of members worldwide”– Amazon has never given firm

Prime membership numbers• More than 1 million new sign-

ups in the 3rd week of December– But many members don’t use

Prime Instant Video

Growing member base

Source: Amazon.com Dec. 26 press release, http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1886961&highlight=

Prime Instant Video

• TV Shows– Downton Abbey– Under the Dome– Falling Skies– SpongeBob SquarePants– Dora the Explorer

• Also includes a good selection of movies

Top Prime content

Prime Instant Video

• Alpha House• Betas• Tumbleaf

Amazon is also testing original content

Hulu/Hulu Plus

• Hulu is a joint venture of three big media companies– Comcast– 21st Century Fox– Disney

• Hulu officially launched in 2008

Old media meets the 21st century

Hulu/Hulu Plus

• Hulu is a free, ad-supported service– Primarily offers recent episodes of

TV shows• Hulu Plus also has ads, but has 2

main advantages:– You can watch older episodes for

many shows– Supports viewing on your TV

through connected devices (for most shows)

Two models

Hulu Plus now has more than 5 million members

Hulu/Hulu Plus

• More than 86,000 episodes across 2,900 TV series– Most top content comes

from Hulu’s 3 owners• Not so good for

movies…

Great for TV

Source: Hulu blog, http://blog.hulu.com/2013/12/18/a-strong-2013/

Hulu/Hulu Plus

• 7 of the top 10 primetime shows– Modern Family– The Voice– The Blacklist– Agents of S.H.I.E.L.D.– Scandal– Grey’s Anatomy– Sleepy Hollow

Top shows

Hulu/Hulu Plus

• Hulu is also trying original content– The Awesomes– Behind the Mask– The Wrong Mans

Original content

Which is right for you?

• Netflix: best original content; popular exclusives; user-friendly interface– Limited new release movie/current season

TV content• Prime Instant Video: popular exclusives;

integration with pay-per-view service; lowest price– Limited new release movie/current season

TV content; fewer originals• Hulu Plus: lots of current season TV shows

– No way to avoid ads; few movies; some shows can only be watched on a computer

Strengths and weaknesses

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