Cuban: Bow to Google, Little Guys

Doug Mohney — Mon, 02 Jun 2008 18:32:40 -0400

Chronic blogger and Dallas Mavericks owner Mark Cuban, trying to keep his mind away from professional basketball until next season, takes a deep dive into the future of online video content -- and it ain't pretty for the little guys.

After patting himself on the back for founding HDNet, Cuban says that the biggest problem for independent creators of online video is that their financial future is basically controlled by Google through YouTube! Distribution of clips through YouTube hides the fundamental costs of delivering video through the Internet in a unicast/on-demand model. The more people who watch online video, the more expensive it is to scale larger; the exact opposite of broadcast, where the first user is very expensive, but more users brings down the cost per user (An economics lesson this reporter learned during his days at SkyCache/Cidera).

Mark predicts doom when Google and MySpace and the other players stop subsidizing the hidden cost of video distribution and notes comments out of The Google that the company hasn't figure out how to monetize (i.e. make money) from independent video.

Independent video producers may end up being forced to license their video to portal sites such as YouTube in exchange for free video distribution. Since "99pct" of content producers don't understand how the economics of online video distribution works, it ends up to be a losing game for most budding Internet video moguls. Portal/aggregators gets the SEO benefits of having all that available content at their master site, but content creators aren't going to enough of a return on their work to make it worth while to keep going.

Cuban says there's also some serious technology whooping coming into the pipeline for the glory of (what else?) HDTV and digital cable that won't be nice to online video.

For more:
- Cuban's bitter prophesy for the little guys of online video.

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Cuban’s On-Demand Disaster

Doug Mohney — Tue, 06 May 2008 15:53:37 -0400

Mark Cuban, billionaire, founder of HD.NET and broadcast.com, and prolific blogger, has stepped onto his soap box to talk about the failings of Internet video and the expectations of free content.

Cuban, who built broadcast.net from scratch and sold it to Yahoo before the dot.com era slid into dot.bomb, knows a lot about the economics and technologies involved in online video. So it’s interesting to find him quoting from and agreeing with a recent report out of Bernstein Research, “And Now for the News…The Emperor Has No Clothes.”

The report presents disturbing findings when comparing online video to classic cable offerings. Online viewers will tolerate less than two minutes of advertising for a typical 30 minute show; contrast that to 8 minutes of ads on cable, add on other overhead and you end up with one-eighth as much revenue per viewer. Worse yet, best-of clips on the web don’t make up for affiliate fee revenues lost by multiple networks.

Cuban says while a la carting of the best of web video is loved by consumers, it also is the biggest risk to professional video content producers everywhere. Serialization doesn’t work because it’s expensive to refresh shows, leaving independent video content in the hands of Google and YouTube and search engine optimization firms.

Will advertisers pay larger CPMs to be online for 2 minutes of ads vs. 8 minutes of ads in a broadcast TV show? Will the shift to 2 minutes of ads for online TV drive more viewers to watch their favorites online rather than through broadcast? Will networks be forced into offering differentiated versions of their shows, perhaps offering a PG rated version for TV and an R-rated one for online viewing.

“Something has got to give,” says Cuban, but further problems lurk as TV moves their broadcast content online.

For more:
- Read Rantmaster Cuban’s blog posting on A la carte online video.

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