Cable/Satellite vs. NetflixOur household subscribes to DirecTV ( DTV). We pay $64.98 a month; however this includes about $24.00 in discounts we received after threatening to cancel. When there's hockey, we pay $179 for one season of NHL Centre Ice. I would cancel if not for my wife, child, sports and sports. We subscribe to Netflix streaming for the paltry sum of $7.99/month. We watch Netflix through an excellent $50 Roku streaming device. Here's what we watch on satellite. My kid likes the Nickelodeon programming. SpongeBob. iCarly. Victorious. She catches new episodes as they come on. You cannot do that on Netflix. My wife and kid enjoy The Voice on NBC. They could watch shortly after airing -- online at NBC's Website -- but I just can't get them to take that step. My wife and I watch some HGTV that we could not stream. And, although we could stream it or watch it on DVD, there's something about just watching random episodes of Seinfeld and Friends as they come on, as selected by somebody else. That's pretty much the extent of it for our satellite viewing. If you watch more than that -- and you probably do -- you're even less likely to drop cable or satellite. That actually makes Netflix a better value. Work sports into the mix and cable/satellite becomes an absolute must. I watch hockey nightly. I could buy the package through Roku, but I have heard horror stories about the reliability of streaming live sports night after night. So, we keep satellite to have relatively reliable access to hockey.
I'm not much of a sports fan anymore, but I like the ability to watch random live stuff -- baseball, the NBA, college hoops, golf -- as I flip channels. At day's end, you need a traditional subscription to do this conveniently, effectively and economically. We're not big on movies, but that's not an issue. If you're a buff, between Netflix and other options, you're good as gold. So we're slaves to satellite for a few episodes a week of first-run television shows, spontaneous reruns, the NHL and access to random sports. For that, we pay more than $65 a month, without second thought. Between Netflix and Roku, we receive more value in a month than satellite provides all year, particularly minus the NHL. Via Roku, we listen to Pandora ( P). Each night I watch a recap from CNBC of their best segments from the day (By day, I use CNBC Pro online). We use several apps to listen to live and recorded radio. And we access Amazon Instant Video (rarely) and Netflix (frequently) through the Roku player. We just subscribed to Hulu Plus. When you add up what we get from Netflix, it's shocking that we can pay just eight bucks a month for it. Throw in Hulu and it's $16 a month. At that point, it's really sports that keeps you on cable or satellite. Netflix for us the past two months: Two full seasons of Louie CK. Half a first season of Weeds. Several episodes of Parks & Recreation and Mad Men. Dozens of documentaries on music, sports, politics, pop culture. I could keep going. Netflix provides convenience at what ends up being pennies per month per show. Satellite's value proposition -- or lack thereof -- doesn't come close. Plus, traditional television does not aid in discovery. As it matures, Netflix looks a bit more like Pandora. Granted, we're light television watchers, but, there's no way most of America can possibly keep track of the series, documentaries and movies in the Netflix catalog as they air. Netflix helps viewers discover or catch up on programming and drives them to new seasons of these shows.
I bet most folks keep cable or satellite for the same reasons we do -- a limited amount of first-run programming and live sports. Throw in an HBO and Showtime and you're easily paying over $100 a month for a small, hardly-filling meal at an overpriced French restaurant. Netflix needs to find a way to tell this story. And charge more. As it signs more exclusive deals, like the recent one with Disney ( DIS), Netflix gathers pricing power with the consumer. That, however, does not change its two-pronged predicament. One, big media fleeces Netflix for the content it knows Netflix desperately needs to remain valuable and competitive. Two, at $7.99/month how many more huge, exclusive Disney-like deals can Netflix expect to sign? Programmers do not want their premium content viewed by a growing Netflix subscriber base at a low all-you-can-eat price. Netflix can't ramp from $7.99 to much more than $10.00 a month (if that) overnight. That's the company's own fault. However, it needs to do something -- sooner rather than later -- to get the revenue it deserves out of its subscriber base. Reed Hastings must get creative. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.