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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Cuban’s On-Demand Disaster