I recently was doing a review of some of our monthly expenses. With the economy in the toilet I think this is a pretty common activity. Mainly I wanted to look for things that we weren’t necessarily using, or didn’t think we needed anymore. The trick to doing this exercise is to annualize all the expenses. $50 a month doesn’t sound nearly as expensive as $600 a year.

Mostly everything was fine, but one number jumped out at me in a very big way – DirecTV satellite TV service.

$1,079.88

That is the annualized cost of our DirecTV service. When looking at that number Tammy and I didn’t feel like we got anywhere close to $1,000 of value out of the service. What to do?

What do you want?

To be clear, none of this is stuff that you really need but is instead something we want. So I started by looking at what we actually use the $1,000 of service for.

We are in essence only DVR users. We don’t really ever watch live TV, instead grabbing season passes for the shows that we have decided to watch and then skipping the commercials. This makes it really easy to explore options as our usage is pretty simple. Our TV usage could be broken down as follows:

  1. Shows that we season pass and watch on our schedule.
  2. Political coverage, breaking news and occasional sporting events – these are all watched in realtime.
  3. European sports coverage: professional cycling and Formula 1.
  4. Rarely we might watch a movie via pay-per-view.

That is really it. To be fair, that $1,000 buys more than just that, but I don’t care since I don’t use it. We use DVR extensively, but almost never to “pause live TV,” instead just to time-shift content. That is an important distinction for us as it removes a key need of DVR that some people have.

Solution: Season Pass Shows

We have three TV’s in the house, they are all Sharp LCD panels, and each one has an Apple TV on it connected to a central iTunes repository. iTunes now offers a decent variety of content so I took the shows that we had season passes for and did a comparison on iTunes. We season pass a total of 13 shows and all but 2 of them were available. The two that were not were both HGTV shows and they have very little on iTunes, and the content was really optional for us.

I then added up the season pass cost for iTunes for each of these shows, calculating it at the cost for the high definition versions of the show (interesting note, you could save even more money by opting out of HD for some shows that you may not care about the quality difference for). The total was:

$647.76

Wow! For our first need I could replace everything that we get now with the same content from iTunes and in the process I can save $432.12. Not only do I save over $400 a year, but I don’t even have to skip commercials since there are none to skip. And there is more. Once the content is in iTunes I can now time shift it like we always do, but I can easily place shift it with my iPhone or iPod. Lastly, I get a better service because the way our house is wired up now I only get HD content downstairs, and with this solution I get HD content for all of these shows.

The story doesn’t end there though. I found that this analysis totally changed the way I was looking at these shows. With DirecTV I have to pay that $1,000 to get into the buffet and then it’s all you can eat from there. Moving to an iTunes solution I was making the decisions independent of a service package or even the network it was on. I found some interesting variances. For example, one of the shows we watch occasionally is Heroes. But Heroes costs $64.99 for the season. I compared that to a show we really like to watch, Boston Legal at $24.99. I would be happy to pay even more for Boston Legal, but there is no way I would pay over $30 for a season of Heroes. Heroes gets cut out. By doing this, the cost of our programming drops another $150-$200 dollars further.

The other big change is how a show like The Daily Show weighs in. You don’t buy a season of The Daily Show, you buy a pack of episodes. The impact of this is that if you stop watching for a month you pay nothing. If they go to reruns for a week you pay nothing. So how do you calculate the cost? I just assumed the worst case of every episode, with all episodes being new every day, all year. If that happened (which it never would), it would cost $119.88 a year for the Daily Show.

On first blush that seems really high, but when I thought about it the real costs would likely be around $80 since there are many rerun periods, and we tend to watch for a while and then not watch for a while. Even then that seems high, but, if I considered what content we watch with what frequency you can justify that it should be the most expensive thing we subscribe to given its daily frequency.

Anyway, my expectation of the real world cost of getting this programming is that it would come in somewhere around

$420.00

That’s right, we would cut our cost by 50%.

Solution: Live Programming

So the next thing I needed to figure out is live programming. This is mostly an occasional football game or election coverage every couple of years. For us this programming is almost all on a major broadcast network, and they all send out wonderful HD broadcasts that I pick up with my ChannelMaster 4221 antenna. I already have that coming into the house on coax and going to the DirecTV satellite tuner.

It turns out that it is very easy for me to get this everywhere in the house. I can just reuse the coax that is already going to each TV and hook the antennae up to it and then plug it into the ATSC tuners on all the TV’s.

This solution actually proves to be superior than our current solution in a few ways:

  1. The quality of the picture is amazing. DirecTV takes the 1080i signal from the broadcaster and re-encodes it typically at a lower bitrate and then sends it over the satellite. The picture quality is noticeably better using a direct OTA ATSC tuner.

  2. Simpler and easier to use since you are watching TV just like watching TV. You aren’t controlling a DVR through an IR repeater that actually lives in the lower level. When people babysit Mazie and want to watch TV it’s always so complicated. Not so in this model.

Now, I don’t have any way to get CNN live for breaking news of that nature, but that is why I have a broadband connection and computers all over the house.

Solution: Cycling and Formula 1

This one is the hard one. There is no solution. Nothing. I’m willing to forego Formula 1 in its entirety, but I really want to watch the grand tours. My best option would be to subscribe to a web site and watch it over the web. You can do that, and in many ways the coverage is better and more thorough. Versus (formerly OLN) continues to have weaker coverage, although I expect with Lance racing again this year it will be better.

Solution: Pay-per-view

This is a simple swap. Instead of pay-per-view bound to time we can just rent on-demand via the Apple TV. The experience is way better than anything pay-per-view offered.

Next Steps

I’m currently battling with DirecTV to move forward with this. I’ve been a customer for about 12 years and they are trying to make the case that I just renewed my contract due to their requirement to swap in MPEG4 receivers for me and take my TiVo (MPEG2 only) boxes away.

It is very clear to me that I will save money and have a better service. I’ll save a lot of money in fact, and have a way better service. I also like that it will get rid of the occasional channel surfing that could be better spent reading a book. But with that said I’ve also felt some hesitation to pull the cord on this. I likely just need to do it and not look back, we’ll see. Saving $600 a year sounds great!

But what about DRM?

You can’t look at this option without addressing DRM. I have a couple of different thoughts on this.

First, DirecTV and its satellite based DVR system is a DRM world that is even more locked up than iTunes and Fairplay. At least with Fairplay I can use it anywhere in the iTunes ecosystem. The DirecTV environment I can’t even get something from one DVR to another, much less to my phone or media player. So, here I’m saying we already have DRM and iTunes is a “more open” DRM.

Second, this is TV content and after I’ve watched it I may not even keep it around. With DirecTV I watch an episode and delete. With the iTunes solution I own (with DRM) the content and can keep it forever (as long as Fairplay works). But I don’t really care about keeping it forever. It’s not a movie or music that I own, it’s a show I watch and then move on.

Lastly, I do think that DRM is going to fade away at some point, and when it does I would only want to be on a DRM system that the majority of “the herd” is on. I find it hard to believe that Fairplay could ever stop working. Even if Apple went out of business and died a horrid death, Fairplay would have to be addressed. There is simply too much content (#1 music reseller is iTunes?) for it to not exist, or be purchased away and made free the same way that iTunes Plus works now. So, there is a clear technical path to phase it out that could be put into effect pretty quickly.