Why Cord-Cutters Aren’t Getting The Holy Grail TV Of Streaming Services Just Yet

As a growing number of consumers drop — or never sign up for — traditional pay-TV services, it’s easy to point to Netflix as a big reason. And yet, Netflix and similar services don’t actually replace the TV experience, especially when it comes to sports. Newer offerings, like Sling TV and PlayStation Vue, replicate the live TV watching experience, but falter compared to traditional pay-TV when it comes to things like DVR functionality. What’s stopping the big players from offering an all-in-one online service now?

It’s not necessarily a technical issue. Streaming services like MLB.tv, Sling, Showtime Anytime, and others show that you can have both live and pre-recorded content available on the same platform.

There’s definitely the issue of affordability at play. In order for a streaming service to win over new customers, it has to be at an attractive price point. Alas, amassing a vast library of on-demand streaming titles costs a lot of money, as do live-TV carriage deals with the networks. So far, over-the-top video services have decided to keep customers’ bills low by choosing one or the other.

If Netflix were to go to the broadcasting biggies to make a deal to carry live TV online, there’s no way it could afford to keep its monthly rate at the sub-$10 level that has made it so attractive to consumers. Similarly, if Sling were to try to bolster its on-demand library to match that of Netflix, its $20/month base rate would be untenable.

Additionally, part of the reason that Sling can afford to include ESPN — easily the most expensive channel in any basic cable lineup — in its base package of channels is by not allowing Sling users to record, rewind or watch ESPN programming in a way that would let them skip the commercials. A number of the big-name networks on Sling — AMC, TBS, CNN — have a similar arrangement that only allows users to view these channels live.

PS Vue has more ability to rewind and record, but shows can only be kept for a limited time and attempting to fast-forward through an ad break on a recorded Vue show is pointless: the fast-forward only moves you 10 seconds ahead at a time, but often requires more than that for the stream to buffer and restart. Vue also currently lacks on-demand content other than the programs you have stored to the cloud.

The streaming service that currently comes the closest to offering something approximating live TV and a large movie/TV library is HBO Now. New shows don’t technically air live on the service, but they are made available within minutes of when they hit TV. Of course, HBO Now is several dollars more per month than Netflix or Amazon and its TV show archives, while sizable, are limited to HBO.

Hulu Plus has a very large archive of TV shows — including current seasons of some shows — and movies, but pays for them not just from $8/month subscriptions, but by interrupting many of these videos with repetitive, sometimes glitchy ads.

It’s possible that many TV viewers don’t care if they can’t watch Big Bang Theory or The Blacklist for a few days or months after they air live, but the same can’t be said of live sports. Many people on the bubble about cutting their cord would probably say goodbye to pay-TV if Netflix or Amazon started including live game streams.

Netflix’s head of content Ted Sarandos was recently asked about the possibility of bringing live sports to the streaming service.

“I will never say never,” he answered, according to Re/code. “I don’t think the on-demand to sports is enough of an addition to the value proposition to chase.”

Sarandos points out that it’s currently the leagues that have the leverage in terms of streaming deals.

Just look at NFL Sunday Ticket — the premium service that gives DirecTV customers live access (on TV and streaming) to all out-of-market Sunday afternoon games. Even though DirecTV reportedly pays more for the service than it gets from the Sunday Ticket subscription fees, it’s so important for retaining DirecTV subscribers that AT&T would have been able to walk away from its merger with DirecTV if the satellite company failed to renew its exclusivity contract with the NFL.

“[I]t’s not like we’re going to get in and de-leverage the leagues,” said Sarandos. “We’re going to go in and overpay like everyone else does, so it doesn’t get me that excited.”

It’s inevitable that we’ll eventually be presented with the option of an all-in-one streaming service that will be sufficient for replacing live TV and offer the convenience, customization level, and portability of streaming services. The question is whether it will be more or less expensive than the patchwork of streaming and pay-TV services that millions of American consumers currently pay for.