The Hidden Savings of Cutting Cable

Streaming services are often cheaper than cable television, but there is also a hidden savings when it comes to dropping cable. A PhD economist shares the numbers.

Each year, more and more Americans cut cable in favor of streaming services like YouTube, Netflix, Amazon Prime Video, HULU, and network specific services such as Paramount+ (CBS) and Peacock (NBC). According to Statista.com, “78 percent of consumers in the United States were using a subscription video on demand service in 2020, an increase of more than 25 percent in four years.”

Subscription fees for most streaming services are a fraction of monthly cable fees and you can often subscribe to multiple streaming services and still see significant savings over cable. But that is just the beginning of the savings. Read on to discover a hidden savings that can benefit your budget by trading cable for the right type of streaming services.

The possible time savings of cutting cable

According to the ratings measurement company Nielsen, about a quarter of every hour of television is advertising. Cable channels have even more advertising than broadcast networks with cable channels speeding up the video of their television shows to fit in extra commercials.

Fifteen minutes per hour of television can add up to a lot of time over the course of a week. If you spend 12 hours watching cable, you spend three hours watching commercials. You can get a rough estimate of the value of that time by multiplying it by your hourly wage. If you calculate the value of your own time and that of other members of your family, you may find that the time cost of cable rivals the subscription fees.

Some streaming services do include advertising, but it is typically far less than the 15 minutes per hour standard of cable TV, and many services offer an ad-free, or at least a limited ads option, for just a few dollars more per month.

The hidden money savings of cutting cable

The time cost of watching commercials is just the beginning.

Advertisers are paying a lot of money to get their commercials on television, and they’re doing it for a good reason. According to Statista.com, a 30-second commercial for the most expensive scripted show on television, This Is Us, costs about $476,000 for the 2020/2021 season. The cost of a 30-second commercial during Super Bowl LIV? About $5.5 million. Advertisers are willing to spend millions because they know that their commercials will make viewers spend even more. (See also: How Retailers Trick Shoppers into Spending More.)

The money you spend on cable and the time you spend watching commercials may turn out to be much smaller costs than the extra money you spend on the things you see advertised. Also, the extra spending may not stop with you. A new car or an elegant piece of jewelry may catch the eye of your spouse, and you might find your shopping cart filled with the toys and cereals your children see advertised during their cartoons.

Cutting cable and controlling spending

Spending too much is a bad habit, and if you want to break a bad habit, it’s best to avoid the cues that trigger it. If you want to quit smoking, throw out your cigarettes. If you want to eat healthy, stay out of fast food restaurants. If you want to quit drinking, stay away from the bar. Advertising leads to spending, and if you want to spend less, you should avoid advertising.

Advertising reminds us of all the things we don’t have. Advertisers don’t just show us the things they want us to buy. They also show us the lifestyles they want us to associate with their products. They show us beautiful people doing exciting things in exotic locales. Buying the products won’t produce the lifestyles, and achieving the lifestyles won’t produce contentment. However much we have, there will always be something that we lack. (See How Much Is Envy Costing You?.)

We will be more content if instead of focusing on the things we lack, we are grateful for all of the things we have. By historical standards, we live in times of amazing plenty with clean water, wholesome foods, and cures for diseases that have tormented humanity for millennia. Cutting cable and switching to ad-free or limited ads streaming services can save money on the cable bill, but perhaps more importantly, it can also mean fewer reminders of the things we don’t have and more time to enjoy all of the great things we do.

Related:

• How to Develop Sales Resistance
• Could Social Media Be Causing You to Overspend?
• 7 Ways Retailers Know What You’re About to Buy

Reviewed March 2021

About the Author

Daniel Wilmoth is a professional economist living in Maryland. He holds a doctorate in economics from Cornell University.