Ditching your cable subscription may feel liberating, but analysts say you could regret it in five years.
In a note to investors on Monday, Needham analysts wrote that “consumers pay for everything in the end.” This means that features like on-demand viewing, la carte channels, and entire seasons available at once, are going to drive up costs.
This could make cord cutters yearn for the days of big bundles, the analysts warn.
The cord-cutting future
Though there is some debate on whether the rate of “cord cutting” is increasing, in general, it’s clear that a high percentage of millennials are living in a cable-free world.
According to BI Intelligence, 25% of millennials have never paid for cable, and research suggests they are watching less and less traditional TV as well.
As my colleague Maya Kosoff outlined, one of the reasons is that it’s now possible to get your fill of great content for a lower price. If you share your accounts with friends and family, you can get access to a selection of “over-the-top” services like Netflix, Hulu, or HBO Now, for $20 total (or less) a month, plus the cost of internet. This seems like a good deal when compared to a cable package that could run you $100 a month.
But analysts at Needham think that’s short-sighted.
They say the idea of “choice” is going to become extremely expensive for consumers.
“We believe that if consumers knew now what they will know in 5 years, they would change their mind and go back to the big bundle which costs them $0.25 per viewer hour and gives them 300 channels to choose from at any time,” the note says.
In other words, the cost of assembling your ideal roster of shows will eventually become more expensive than your cable bill was, according to Needham.
First appeared on BI