The Future of TV: Why NewTeeVee Is Wrong

24 Comments

Editor’s note: Mark Cuban published a post on his blog yesterday titled The Future of TV is……TV in which he proclaimed that consumers don’t want over-the-top video, but instead want to watch cable TV and VOD on their new, shiny HDTVs.

Naturally we disagreed, and couldn’t resist making our case with a post titled The Future of TV: Five Lessons for Mark Cuban — prompting him to pen a reply, which he sent via email. With his permission, we’re providing a very lightly edited version of his email below. It’s a point-by-point response to our post, so we recommend first reading that and his original essay first.

  1. Sports on TV. Horrible example.  The only thing that sells is sports during the day. That’s why March Madness and baseball work.  People can only get them on their computers at work. There is no reason to watch via VOD if you are sitting in front of your TV. Internet people may want to watch this way. The rest of the world just turned to CBS or the network carrying the game.
  2. This is the “I told you streaming works great ” example everyone uses. It’s a great example of what streaming on TV could be….if every content provider and TV Provider ignored the competitive threat of Netflix.  Why would the content owners continue to license the content to Netflix for peanuts and put at risk BILLIONS of dollars? Right now Netflix has been BRILLIANT at monetizing previously unmonetizable content. But as the balance of revenues change, so could their access. They already had to give up a 28-day window on movies. You don’t think that is their last concession, do you ?The other thing to note is the percentage of Netflix subscribers that already subscribe to a TV provider. Netflix has to be concerned that it will be easier for those people to give up Netflix if their TV provider expands their VOD offerings and allows for queuing of streams to a TV channel than it will to give up the TV provider.
  3. I own one of everything, from Blu-ray to Xbox/PS3/Roku/Seagate Direct to Hard Drive/Tivo and every satellite, telco and major  cable provider (at home or offices around the country). I make a point to know what is out there and how it works. I have spent points on Xbox, streamed via Blu-ray and used applications. All have value beyond their primary application. But they are complementary, not primary.Now some may say that you can only use your TV for one thing at a time. So whatever you are using it for is the primary application. Slingbox users will tell you otherwise.  TV Everywhere applications will prove otherwise. Then again, you have the problem I mentioned before and which Internet folks seem to ignore, the business model of content providers and TV providers.  They aren’t stupid. They won’t continue to give content away or sell it on the cheap at the risk of losing BILLIONS of dollars in revenue.
  4. Wrong again. Remember that thing called a router that gives you Internet access ? Your TV can offer Internet connectivity, but there is always another box between you and the Net.  How easy is it for most people to configure to make sure they get the streaming bit rates they need? Oh, and what about all the different 802.x standards? It’s hard enough to call Time Warner, wait till they have to call Cisco to get help and try to figure out why their Netflix is buffering all the time. Or when they can’t figure out why every time two of those new TV sets with Internet access are in use at the same time the Internet in the whole house slows to a crawl. And don’t even begin explaining why Internet video is all bit starved and looks far worse than anything you got or get in High Def  from your TV provider.
  5. I can’t say more people won’t cut the cord. That happens in every recession and its worse in a great recession. You got me there.

Picture courtesy of (CC-BY-SA) Flickr user Keith Allison.

Mark Cuban is the owner of Landmark Theatres and Chairman of the HDNet cable network. He blogs at Blogmaverick.com.

24 Comments

Weekend Poll: Are You a Cord-cutter?

[…] Weekend Poll: Are You a Cord-cutter? By Liz Shannon Miller Jun. 19, 2010, 12:01am No Comments       One of the bigger comments debates on NewTeeVee this week revolved around cord-cutting, and whether it’ll still be “a myth,” like Nielsen says it is currently, in five years’ time. Heck, our good buddy Mark Cuban even came by to tell us that we’re wrong. (Again.) […]

OTR

It depends on the type of content.

Shows allready aired via Free-TV can be downloaded with online-personal-webrecorder, e.g. http://www.onlinetvrecorder.com (US+UK+German TV) without asking the studios and so its free. Obama changed the rules here May 2009, see comcast case. Or you find some of the shows in Hulu.com.
Latest Movies (not aired) can be exchanged legally via Fair Use Rules from friend to friend (e.g. homeloadtv.com). And again it is free.

So my conclusion is, that all studios should be happy for any commercial service paying at least anything. Am I wrong?

timmyjoe

Mark seems to assume that all that’s worth watching is commissioned by the 5 conglomerates that control all the networks/cable station. He also assumes that people will continue to tolerate commercial breaks that keep growing in length, and show’s that continue to take a dive in their overall quality and appeal.

It’s also rather ridiculous to simply surrender your desire to view content to the incompetency of the internet providers: “Well, broadband speeds are lacking, so we should just give up and stick to TV.” Um, how about we ask more of our internet providers? How about we insist upon the national initiatives that Google is spear-heading to increase broadband access and speeds?

I can understand how the guy who owns HDNet would be fearful and defensive in the face of a paradigm shift that’s threatening his business, but I complete disagree and in fact abhor his defeated attitude.

The most telling information is that yeah, people are buying new HDTV’s in droves, but it isn’t about the hardware as it is THE CONTENT. Of all people, Cuban should know what matters is what appears on screen, not how it gets to that screen. And what’s happening increasingly (and w/ people like me) is that we’re realizing that there’s worthwhile content outside the world of broadcast television. And the worthwhile content that DOES exists on TV is so scarce, that it’s hardly worth spending $80 a month for the ability to watch shitty programming in high-definition: you may be able to better see the dirt, grime, and stains when you look at garbage under a magnifying glass, but it’s still garbage. I’d rather pay $14 a month for 2 DVD’s to show up in my mailbox and an HUGE library of on-demand content at my disposal.

And as far as cable companies VOD goes, never have I come across such a compendium of crap and worthless TV. There’s usually a reason that certain content goes on VOD for free — b/c it sucks and nobody wants to watch it.

My point is simple: TV is full of content. Said content is nothing but information and moving images. There are other places to get your information and moving images. It’s called the internet.

I cut my cord 2 months ago and I’ve never been happier. No desire to return to cable TV. I get all my news from the internet (who do I need overpaid anchors to read teleprompters that were written by producers who were getting their information from the same place that I can, i.e. the internet? instead, i, like any able-minded adult, am able to find any news i need online and i make an annual donation to Democracy Now! to get my punditry and opinion-based discussion. I’m also tired of people like this insist that “journalism is dead” — I’ve never seen journalism in such a health, more vibrant state. Just b/c people aren’t watching CNN and stopped buying ink on paper, doesn’t mean the desire for real-world information is withering; it’s stronger than ever) I watch tons of movies and TV series on Netflix, and yes, I torrent shows that I insist on watching. Why? B/c Time Warner isn’t giving me an option to pay to just watch the shows I want to watch — it’s an all-crap or nothing package that costs $80+ a month.

Sorry Mark, but I’m not missing VH1’s celebreality line-up, COPS marathons, or dancing w/ the stars. I enjoy finding and watching the expansive and seemingly never-ending catalog of content that’s available online (and actually worth watching). And no, I’m not talking about YouTube’s front page. I’m not a 14 year old girl. I’m a reasonable, capable adult who knows what I want to watch and am not going to surrender my eyes to profit-hungry buffoons like Mark Cuban who are blinded by their own biases.

Edward

I think Mark has you guys on point 4.

Port Forwarding, home sharing, the differences in N, B, G routers are enough for people to maybe try and sort out once to stream HD, but if it doesn’t work most give up.

Izzy

WHERE I AGREE W/ MARK
people want to watch content of their TV, this is what they ultimately want hen they are home.  When on the GO it’s a different story, it’s all about the Internet because of it’s convenience (unless you use Slingbox). As it is now, people go to the net even from home because there’s a lot of interesting stuff and a lot of NEW stuff Which requires no commitment and lastly because it’s On Demand so you only watch what you are interested in. That being said, the majority of Americans do probably use Internet vid. at home as secondary rather than primary mean of media consumption.  Again, I said the majority of Americans, not us technophiles. To them the TV is still the primary Go To appliance.  For now cable takes the win because they have a stronghold on current content and the majority of Americans don’t want to deal with the hassle of getting what they want from 5 or 10 different places.  

WHERE I KIND OF DISAGREE WITH MARK
Ok, so the missing link bet. The two camps was this: most people, young and old I dare guess would like to have a-la-cart service where everything is On Demand all the time without having to Add an additional layer to the monthly bill. The way we consume media via cable does NOT make sense. 800 channels when all you watch are 10-15 and sometimes venture to those channels you never watch?
If there’s anything that has come out of the Internet era is that people are used to getting all info On Demand and TV is lacking in that dept. The way te content owners ate putting the squeeze on the cable
providers I expect them to eventually squeeze Nflx again because like Cuban said there’s more $$$ to be made. The Ntflx model however is the winning formula, but until a forceful party comes and brings Current TV & syndicated TV shows as well as current and syndicated movies to a service that Has a more attractive  price and always On Demand we will continue with this fragmentation. Such champion could be Apple but even they are waiting for some sort of break that would make it work. But the cable companies are fighting it plus the content providers are moving slow and that’s what’s keeping the change from happening. But it will, netflix, apple, google and maybe msft will continue to push forward and eventually a couple of new kind of content aggregator will be our new TV provider.   

P.s. I have cable and ever since I put netflix on my ps3, I hardly watch my cable channels. Why?
Because eventhough tHe streaming selection is limited I het to watch ONLY what i want. Had my cable company given me a nicer user interface, ability to at least pick some ch. Over others and better choice for what i paid I would NOT be wishing so bad bad for a company to step in and disrupt their biz. Ea. Day I feel more incline to just pay for the internet access and use netflix + VOD from the net.

EXCITING TIMES!!!…now which stocks to buy???? :-)

Niraj

Regarding Netflix, Cuban is reaching. “But as the balance of revenues change, so could their access.” It could just as easily change the other way…if Netflix is making money, the content providers would too, or they could ask for more.

It’s been clear that the content providers haven’t been trying that hard to expand their VOD offerings much in the last few years…TV shows only have a select number of episodes available (usually only a handful of the most recently aired ones) and free movie selections are limited and are generally not popular/recent movies.

And finally, he claims Netflix “conceded” the 28-day rental window, but misses the whole reason they did it, which was to get cheaper discs so they could spend more money on their instant streaming. In both of the 28-day deals, they picked up a bunch of shows and movies for instant streaming that they did not have access to before, so this directly contradicts the idea that Netflix will have to make concessions when it comes to instant streaming.

Mike

It’s still a concession, though. Don’t you think Netflix would’ve preferred to get a better deal on discs, and more Instant Watch content, and be able to make new releases available right away? Of course they would. They conceded the latter point in favor or the former ones because that was their best option available, but it wasn’t the ideal option.

Niraj

Yes, but Mark put this in the context of streaming video. In that context, not only was not a concession, since it only included physical disc limitations, but it was in fact an improvement to the streaming service.

Surely a concession was made, but not related to streaming, and it is also not a indicator that Netflix will make more concessions in the future, particularly when it comes to streaming.

Plus he is coupling that with his argument that they can increase the VOD content to pressure Netflix, though as I mentioned they haven’t even hinted at that possibility to date.

David H. Deans

My take-away from this debate, Mr. Cuban seems rattled by the thought that his vested interests are at risk.

To his credit, the following comment indicates that he — unlike some of his peers in the legacy big-media business — has moved beyond denial.

“I can’t say more people won’t cut the cord.”

Janko Roettgers

Paul, the Yankee Group didn’t say that those seven million households would all go cable-free, but either ditch or significantly reduce their pay TV commitment. That could also mean ridding yourself of premium channels. A lot of this may have to do with the fact that many recent HDTV buyers will face the end of their promotional cable TV subscription in the coming months. Paying 40 bucks a month for a nice cable package may seem like a good deal at fist, but see the price go up to $80 or more, and you might reconsider – especially if times are tough…

Paul Sweeting

Agreed. You might. But I certainly wouldn’t invest in anything premised on cord cutting based on “you might.”

Shakir Razak

Hi,

The Thing that Mark Cuban needs to do is a Cost-Benefit Analysis combined with the perspective of Time.

I used to completely agree with Mark Cuban, not least network capacity and capability; However, times and technology change.

Ultimately, the choice is to let consumers, who are all becoming more tech-savvy, hunt down what they want through less legitimate means, or provide it to them in the same way that allowed Apple to become the de facto standard in media-content provision without a single sector leader.

Networks will improve, UI’s will become easier, access will not be scarce, whether it’s from FTTH providers, or DSL providers, 4G fixed or simple mobile internet, and all the content in the world will be available through one means or another.

The Internet is the great dis-intermediator, and as websites owned by Sports-bodies have become their own profit-centres, so such evolution will continue.

As mentioned by others, just how so many older people don’t get the latest fads in social-networking, yet many millions are completely au fait with them and wouldn’t be productive (socially or work-wise) without them, it’s this generation (of mindset) who will have no care for the network provider or any other false mythology from the world of scarcaity and gate-keepers control!

Yours kindly,

Shakir Razak

noisysf

That internet content necessarily looks worse than broadcast HD is pure BS.

A 720p HD stream can be made to look far superior to cable at 2mpbs (or 4mbps for, say, the Pacific) in H.264, vs roughly 14Mbps Mpeg2 for cable distro. It’s more processor hungry, yes, but that becomes mot when (and when if the key) a web standard is picked. At that point, encoding instruction sets into main CPU’s or adding App specific decoding chips take care of that, and it’s a mater of time. Further, if your back end and players are programmed and tuned properly you can actually get a MORE consistent picture and playback with adaptive streaming technologies, especially if your watching using something like Boxee making an API call as opposed to a browser, which remains by FAR the weakest link in the video chain! (and something HTML5 will go a long way toward remedying anyway.

Tom

Not true. To achieve similar quality to MPEG-2, AVC (H.264) takes roughly half the bitrate. Keep in mind that broadcast HD in the US is 19.6 Mbps MPEG-2, regardless of whether the broadcaster is using 720p60 or 1080i30.

Terry Heaton

The fundamental flaw in Mark Cuban’s writing is an assumption that consumers have no choice in the world of artificial scarcity. In other words, if he broadcasts a movie on his HD net — and there’s no other way people can see it — they will, of course, watch it with him. This is bad logic, for the evidence in recent years (the ratings slides pre-dated online video) strongly suggests people simply aren’t interested. Intrigue and interest aren’t sufficient to support a passive, paid model, which is why I support his admonition about VOD. I’ve been saying that for a very long time. But even in that world, people will be highly selective and may, in fact, select an online source rather than that which is beamed in via cable. People with money are susceptible to false assumptions about people without it.

Derek Flanzraich

Definitely agree for the most part. Consumers don’t have a choice in a world of artificial scarcity, but that world no longer exists.

In the future, the reality is that (1) the amount (and types) of content we consume is just going to increase and (2) the way we consume content will just continue to broaden. The Cable Companies & traditional Content Owners aren’t going to be able to keep up with young, scrappy companies that will innovate at the edges of those two principles– and that’ll be enough to disrupt the whole thing.

More on the challenges in the space– and a “how to” disrupt it here: http://www.derekflanzraich.com/2010/05/how-to-disrupt-television/

Paul Sweeting

Some lessons for NewTeeVee and Mark Cuban:

1) Cuban is right about sports. There is no way online alone only will be able to sustain the enormous rights fees commanded by live sports, at least not anytime soon. So for the foreseeable future, sports will need a TV outlet, and given a choice most consumers will choose to watch most sporting events in high-def (if not 3-D) on their big-screen HDTV most of the time.

2) Cuban is also correct that boosters of online or over-the-top video delivery frequently ignore (of fail to understand) content owners’ business models. Sometimes even content owners themselves are slow to recognize their own interests, which is how Netflix has been able to build a large base of subscribers for its on-demand streaming service more or less as it wanted. But the studios have started to figure out that all-you-can-eat subscriptions are a lousy business for them, especially when someone else owns the subscriber relationship, and they’ve now begun to rein Netflix in. And no, the 28 day window will not be the last concession Netflix makes.

What I think Cuban is overlooking is that the studios right now do not really have a transactional alternative to offer consumers. No paid download service offers even as much cross-platform flexibility and content portability as DVD or anything like the value proposition that Netflix offers consumers. So even if they rein in Netflix, I don’t know what that really gets them unless and until they can come up with a transactional business model that offers consumers content portability and device interoperability. Until then, consumers will keep signing up with Netflix. It’s essentially a race at this point between how quickly Netflix can build its user base and how fast the studios can come up with a workable alternative to non-transactional subscriptions.

3) It may very well continue to be about the set-top box, or at least the “set-back” adapter if the FCC has its way. If it ultimately mandates a standardized interface between MVPD services and “smart” video devices, as it’s currently proposing, it could well lead to a new generation of integrated devices — whether on the set-top or baked in — that will eventually blur the distinction between QAM or satellite delivered video and IP delivered video.

4) I think the jury is still very-much out on cord cutting. The Yankee Group’s forecast that one in eight households will cut the cord in the next 12 months would mean more than 7 million households. That sounds implausible to me without more data on the phenomenon than we have seen to date. Moreover, home entertainment is a bit like political elections. It’s a comparative exercise. You may hate your cable company, but it may be a better option than any alternative actually available to you.

MVPD’s real long-term problem is not cord-cutters but never-connectors. Over time, as more content becomes available over IP platforms, and more young consumers grow up with that reality and start forming new households, getting the cable or satellite hooked up before you move in will increasingly be like getting the land-line phone hooked up: something your parents did way back when.

Shawn

Cuban’s rant doesn’t surprise me, he is a pro sports owner and he gets millions from cable/satellite providers. He is correct about the fact that content owners won’t give away their content for free, we the consumer are willing to pay a fair price but give us a-la-carte programming.
I* was tired of paying $90 per month for the same crap so I got rid of cable, I get about half of my video content online.

I am an average American not some billionaire that can afford every toy.

Scott

Regarding “Sports on TV,” if your local CBS is not showing your favorite team’s NCAA Tournament game in your area, you could watch the game on MMOD. ESPN3 works the same way.

I’d rather watch my team’s game on a computer than 2 teams I care nothing about in HD on TV, but I think Mark Cuban is just the opposite.

Niraj

I was going to post exactly that. And what if you are a fan of a team that’s not local? Odds are better you could catch those games online, but not on live TV.

Mathieas

Wasn’t this the same guy who made his fortune selling broadcast.com to some incredibly stupid people at Yahoo? (5.9 billion dollars for a company that never turned a profit and had no real assets). You would think he would have more faith in Internet video.

Comments are closed.