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I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google (NSDQ: GOOG) for free. Wh…

Mark Cuban at NBA All Star Game 2010
photo: Flickr / Staci D. Kramer

I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google (NSDQ: GOOG) for free. Why ? Because they are finally getting BILLIONS of dollars in retransmission fees from their distributors. This is new money. It is found money. It is money they are fighting for. Just ask Fox and Cablevision (NYSE: CVC) what they think of each other this week.

The idea that they would take and fight for money from their distributors, who generally are the same ISPs that Google TV delivers content over, and then offer the exact same shows for free through Google TV, or any aggregator that expects that content for free is probably one of the dumbest concepts ever.

Now if Google were to go to those networks and offer them money per month for every buyer of a Google enabled device or TV, that would be different. Then they would be a tv provider competing with the rest and they should take their money. Think Google will ever do that ? I don’t.

So giving the same content they not only charge their distributors for, but also charge their local affiliates for to Google for nothing or for a share of revenue ? STUPID.

If Google sticks to their guns of not paying up front for content like Netflix (NSDQ: NFLX) does, they will have handed Netflix the entire streaming universe on a platter.

Did anyone else see the report that Netflix streaming consumes 20pct of download throughput during weekday primetime hours ?

If this is true. Its one more reason to think that Netflix has won the streaming wars and those broadcast networks would be moronic to give their content online away for free. Why ?

First of all, do you know the difference between Netflix and Google when it comes to content ? Netflix pays up front and offers minimum guarantees. Google and everyone else for that matter, pays a commission based on ad sales. (which works wonderfully on Youtube for them)

So riddle me this batman. Netflix is on Google TV , correct ? Given that Netflix pays and Google TV doesn’t, why wouldn’t/shouldn’t the broadcast networks offer all of their shows to Netflix as a way to reach Google TV users, knowing that they will get paid for their content. Paid HUNDREDS OF MILLIONS OR MORE for their content.

All you internet pundits want the broadcast networks to give the content away for free. THAT IS STUPID. Get Netflix to pay you on a per subscriber basis on a par with what your other TV providers pay you. Netflix becomes a competitive TV provider. BRILLIANT. You get paid. You reach Google TV users and non Google TV users.

Of course you basically cede to Netflix control of the streaming content world. You give their streaming only subscriptions a unique value beyond old shows and movies. Goodbye Hulu as well.

Of course once they get the broadcast nets, how long until they add the cable nets like ESPN (NYSE: DIS), Disney, etc., etc. ?

Back to the Netflix using 20pct of bandwidth. Now that they have gotten there, it is going to be easier for Netflix than anyone else to grow their bandwidth usage. They can add streaming subscribers at a controlled level and it could work. Growing their usage as a percentage of total bandwidth consumption quickly becomes a trojan horse in the streaming wars. They are consuming so much bandwidth, they literally are blocking out the ability of anyone to compete with them.

If Netflix gets to 25pct do you think Google is going to be able to also get to 25pct during primetime and all of the sudden 50pct of the internet’s bandwidth during primetime is allocated to streaming tv originated shows, movies and other video ? Of course not. And that’s before consideration for Youtube. How much bandwidth in primetime does and will Youtube use ? After you combine Netflix and their growth to Youtube and its growth, what kind of internet bandwidth is going to be left for anyone else for streaming TV to millions ?

There will be big problems and lots of quality and delivery issues long before we get close to those percentages. Leaving Netflix in a phenomenal position. They get to adapt to a declining available bandwidth environment with an existing product , revenue and subscriber base. There is no such thing as equal access when you are blocking up 25pct of the lanes on the highway 24—7. The others can’t even get on the ramp.

Their competitors have to figure out how not only how to overcome the technical hurdles of reduced available bandwidth, but also a business model since no one will want to give content away for free when Netflix can pay them.

Netflix is smart as shit.

Netflix is also great for traditional TV providers. TV works. TV works for any number of subscribers or viewers. 100pct of the digital bandwidth that TV uses is designed, managed and operated purely for the distribution of TV and complementary features. It will work.

Netflix should end up as the only “TV” provider that truly works on the internet, Which means that content providers like the broadcast and cable networks can be paid by Netflix on a per sub basis for their subs who want to subscribe via the net, and from traditional tv providers for those who want buffer free, (relatively) full quality TV the old fashioned way.

Oh, and one more thing. Expect your internet bills to go way way up as ISPs make it clear that all this video over the internet is going to require billions in upgrades. The irony is that while you may not like paying for cable channels you don’t watch. You will end up paying for cable channels on the internet that you don’t watch as well. In this case you will be paying via higher net bills for the extra bandwidth required to stream cable channels that your neighbors like to watch

Mark Cuban, owner of the Dallas Mavericks and cofounder of HDNet, offers running commentary on Blog Maverick and allows us to publish it here when the subject fits. This one shows why we were so keen to have him at our Nov. 8 conference, The Battle for the Digital Home (register here), and so regret that the Mavericks are playing that day.

  1. Google doesn’t care about the content, it wants the internet on your TV. How the networks deal with that massive invasion will be up to their strategy departments, b/c now they will be competing with the internet to entertain and inform. Google would probably not be wise to pay the cable and network stations money to crumble under the weight of the internet. If the television programming industry thinks it’s going to get a free pass, they have another thing coming. The music and news industry had to reform and reinvent (or be reborn), what makes TV any different?

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  2. What does Cuban stand to lose if Google streams network television?? Is this really an impartial article?? Why not just say “I have millions to lose if the networks allow this”.

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  3. Sorry Mark, you’re an idiot.

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  4. For free? What’s the difference between watching broadcast network shows on your laptop vs. Google TV? Google TV is just enabling you to do what you’ve been doing on your home computer all along, but just on a different portal now (your TV set). So would Mark’s comments apply to these broadcast network shows being available on the Internet in general? Last I checked, most of these shows that you watch have tons of commercials embedded throughout the episode. Thats real $$$ that the advertisers are paying these broadcast networks for viewers to watch over the Internet. That same $$$ is garnered whether you watch it on your computer or on GoogleTV. Free? please… the broadcast networks are making money either way.

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  5. stick with owning a basketball team.

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    1. Staci D. Kramer Sunday, October 24, 2010

      We probably should have included this in the fine print. In addition
      to the Mavericks and other assets, Mark Cuban also owns 2929
      Entertainment with Todd Wagner. Holdings include cable nets
      HDNet/HDNet Movies, Landmark Theaters, film distributor Magnolia
      Pictures and a stake in Lions Gate .

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  6. Netflix does not control its own destiny. They are a digital middleman. They must pay for content. And they are dependent on the infrastructure of their primary distribution competitors, cable MSO’s and telcos. If the large integrated media companies decide that streaming video services like Netflix are causing people to drop pay-TV subscriptions, they may choose to pull back their content. Yes, Netflix can write a check. But, the distributors like Comcast and DirecTV pay tens of billions of dollars in affiliate fees. If I ran Disney, I would do everything possible to protect those payments. I sure wouldn’t want that system to be overturned by OTT.

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  7. Hi Mark, I know we exchange emails from time to time and not public, but there is one thing you need to add to your way of seeing video streams and BW. I do it so i know it. Total internet BW of general traffic is hops from stateless nodes anyone can use, websites etc. Once the video stream starts, then that traffic goes through CDN services = private fiber out to the IPS edge C/O ( I use Level 3 but most all edge origin is served next door to the last mile’s ISP these days ) so really the majority pipeclog is also from C/O to homestead doorstep in the last few miles… and it gets there from the CDN traffic pipes. We HAD to work that way since regular web was tooo damn slow.

    ALSO, Netflix quality is crap. Vudu ( walmart ) kicks its ass in quality but is on-demand and not all-you-can-eat model so its monetizing can manage CDN costs that Netflix doesnt

    I woorked for you way back as an encoder for Realvideo in the broadcast.com days annd what i said then is true now… there are “sweet spots” in the codecs that you can hit with the LUT management and golden frames and black level noise cleaning. Same tricks still there in Vp6 and Vp8 and to some extent in the prescaler block of h.264 Main profile. Clean your video and it goes from needing 3mbit down to 1.25mbit and looks the same or better. All this is do-able equally for Samsing’s maple Browser flash in internet@Tv ( doing that now ) and in google TV codec ( just got the Sony 46″ – give me a couple weeks ) to gpu pipeline.
    Internet TV can easily be better and less digital BW than cable currently brute-forces, if these morons would just pay attention to some basic video math, no serious BW problems. Comcast is still pumping mp2 macroblock crap for 100 bucks a month.

    IMHO get smart on this Google enablement of devices NOW and when critical Mass arrives for this market, the Ads can be interactive and better and the video wont suck like it does now.

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  8. The sweet spot for Netflix is that they have a nice subscription OTT service that enables media companies to monetize their content, especially catalog titles, but does not compel people to cut pay-TV (which would force media companies to pull back at least some of their content). Media companies that trade pennies for dollars are not long for this world. Also, in addition to affiliate fees, media companies will watch how Netflix affects their syndication revenues (possible compression of 2nd run syndication values) and their DVD sales. But, even if Netflix can get into that sweet spot — a service that compliments pay-TV, and not a substitute for it — that still doesn’t alleviate two more strategic issues: i) their dependence on content providers/studios (which can and are raising prices) and ii) for digital distribution of entertainment, there really are no barriers-to-entry. Yes, a competitor has to pay for that content — and Netflix already has existing revenues to put into content acquisition. But, that’s a particularly dangerous way to build a barrier when you consider that companies like Comcast already pay billions to deliver basically the same content. Those pockets are very, very deep.

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  9. Mark, you are so, so wrong. I NEVER paid for cable shows with commercials. I pay for netflix, and HBO, showtime but no commercial content. If I have to watch commercials, I watch them over the internet, currently using either direct pc/tv hookup or ps3. Nice to no longer have to use the antenna.Too bad cbs doesn’t stream. I just don’t bother watching them. I pay for what I want to watch ( setanta broadband, NBA etc). Finally the internet is delivering what consumers want. Fox should watch out- they will just force more people off of cable). It’s a broadcast network- and their content is paid for by the advertisers.

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  10. Google TV is doing nothing other than making it easier for one to find the content these folks are already providing. Oh – and doing it on a bigger monitor (your TV). What is all the fuss about? If Hulu streams an NBC show that I can go to Hulu and watch for free and I watch that exact same stream via Boxee or Google TV or Internet Explorer or Firefox – who cares!? I am still watching all the commercials and everyone is getting more impressions. Why on earth would anyone care how I got there. It’s like Mark Cuban caring whether I drove a scooter or a car to the Mavericks game and then wanting to charge me more for a ticket because I drove the scooter.

    Someone please poke a hole in my logic, because I really do not want to know that all of these smart people out there are idiots. BTW: I am a Hulu Plus and Netflix subscriber and watch both on their apps on my internet enabled TV.

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