Streaming vs cable: a current-era comparison

The cost-savings argument that drove cord-cutting in the 2010s has narrowed substantially.

Industry research (Leichtman Research Group, Parks Associates) has tracked the average cost of a streaming-heavy household versus the equivalent cable subscription. The original price gap — streaming meaningfully cheaper than cable — has narrowed as streamers have added services, raised prices, and introduced live-TV bridge subscriptions to replace cable's bundled live content.

The fragmentation that produces this convergence is structurally the same phenomenon Rochet & Tirole modeled in two-sided market economics — the cost of subscribing to multiple platforms rises faster than the cost of any individual platform.

"Two-sided markets… try to get the two (or multiple) sides on board by appropriately charging each side." — Rochet, J.-C., & Tirole, J. (2003). J. Eur. Econ. Assoc., 1(4), 990–1029.

What's still better about streaming is the experience — on-demand, no contracts, multiple devices, the ability to drop in and out monthly. What's worse is the requirement to manage many small recurring decisions instead of one large one. The household budget impact has converged with cable; the cognitive load has shifted.

For households choosing between platforms today, the cost comparison should be done on actual usage rather than headline price. The household that subscribes to four streaming services but watches one heavily would pay less by keeping that one and dropping the others, regardless of how the cable comparison comes out.

References

• Rochet, J.-C., & Tirole, J. (2003). J. Eur. Econ. Assoc., 1(4), 990–1029.

Related: Streaming cost comparison · Streaming price increases · Bundles