The Subscription War: You're Bleeding To Death

You know what's great? My smartphone puts the world in my pocket. Broadband puts 2,454,399 channels on my HDTV. I can access the internet from a freaking aeroplane! You know what's unsustainable? Paying for it all.

Here's why: a well-equipped geek in the States will, in our research, have a subscription and service bill total of between 200 and 750 US dollars a month.

Let me break it down. You've got your smartphone bill, your pay TV bill, your home broadband bill. Those are unavoidable expenses - there's not much you can do about them.

Then think about the must-have gadgets on the horizon: a smartbook that requires a data plan. A tablet that'll require Wi-Fi HotSpot access or a 3G dongle. The same for a thin-and-light notebook. And those are just your 1:1 service fees for devices.

Now throw in all of the wonderful content and service subscriptions you either already have or will soon. You've got TiVo, which is better and cheaper than most pay TV–provided DVRs but still about $US11 a month. Netflix, to rent or stream unlimited movies. Hulu's free for now, but we know they're going to start charging any week. If you've got an Xbox 360, you've got an Xbox Live Gold membership. I'm a city slicker with no car, but if I had one I'd need a navigation app that's good enough for everyday use. A free Flickr membership is fine today, but once HD camcorders gain prominence, you're going to want a Flickr Pro membership for high-def playback. And so on.

If that doesn't sound so bad, see how it looks when you add it all up:

That's right: if you want to stay even close to fully connected, you're expected to cough up nearly $US1000 a month. Not for hardware. For fees. And that doesn't even include niche services like Vimeo and Zune Pass, or one-off purchases like ebooks or iTunes downloads. Or, god forbid, food and shelter.

A couple of years ago, we talked about the Infinite Video Format War, and the dozen-plus disc-free video formats that each come with their own subscription models, fees and offerings. There's still no resolution there. Think of the Subscription War like that, only extrapolated across all of your devices, content, and services.

The problem isn't subscriptions themselves. Content subscriptions reward risk-taking, which is great! How many movies have you discovered because of a Netflix recommendation? How many shows have you watched on Hulu that you never would have found on your TV's channel guide? And individually, they seem cost effective.

The problem is fragmentation. The problem is that each service provider thinks within a bubble, without recognising the larger ecosystem of payments we live in. It's like those nights in high school when each teacher would assign you two hours of homework. There weren't enough hours in the day then, and there's not enough money in a pay cheque now. And there shouldn't have to be.

There are some ways out: you don't actually need cable or satellite TV to enjoy your favourite shows. If you've got a smartphone, you really don't need a land line, and you can probably get away with the minimum 450 minutes if you lean on messaging and Skype. There are also free navigation apps that'll work in a pinch. But at the end of the day, you're still looking at hundreds of dollars a month for services you don't need constant access to.

So what's the answer? Well, ad-supported content generally comes free or highly discounted. But ad-supported solutions require people to purchase the things being advertised. Hulu's plans to start charging indicates that that model's not sustainable in the long run. One blanket subscription that lets you access several different sites or services works for the online porn industry, but those linked sites all operate under the same umbrella parent company. Not feasible when the participants are major competitors.

The honest answer is that there may not be one. Not yet, anyway. Eventually the monthly bills will stack up so high that people will have to start cutting ties with companies, who will in turn have to either lower prices or fade away. You've already started to see it with AT&T and Verizon cutting prices on unlimited plans last week. Until everyone gets on board, though? We're all just casualties.

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