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Summary:

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.

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  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?

  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”.

  3. Sorry Mark, you’re an idiot.

  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.

  5. stick with owning a basketball team.

    1. 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 .

  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.

  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.

  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.

  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.

  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.

  11. Am I the only person who downloads my tv shows for free? Sometimes even before the show airs it just appears all over the internet. Who knew? I can finally throw out my VCR.

  12. I think Mark is right. Just remember how he made all his money. Mark is also a big proponent of net neutrality. This is the main point. Having the foresight to see once again a new age. I don’t want to pay 100 bucks a month to read my email.

  13. Mark – how hard is it to start an ISP? I remember in the old days there used to be all these little ISPs everywhere but it seems the only place I can get internet in Boston is the big cable companies. Were these small ISPs regulated out of existence or they couldn’t keep up with broadband? Is there any hope to start one’s own ISP, perhaps using Wimax or similar? Seems ripe for opportunity to break the backs of those utilities. Thanks!

  14. In the video over IP endgame, isn’t bandwidth the real key? And who’s got more available bandwidth than Google? All that dark fiber, and they’ve got the infrastructure to use it.

    Also, I’ve been using Hulu Plus for a month or two, and what’s really clear is that somebody needs to do a better job targeting ads. Who could do that better than Google?

    Netflix may pay for the content, but Google can find somebody else to pay for it.

  15. In the video over IP endgame, isn’t bandwidth the real key? And who’s got more available bandwidth than Google? All that dark fiber, and they’ve got the infrastructure to use it.

  16. There are a lot of commenters on this thread who don’t appear to understand, or appreciate, the economics of the television industry. I wonder if they think that television productions are self-funded, and that the evil networks / cable channels just exist to impede their access to this endless wellspring of “free” content that Google TV will finally deliver to them? Also wondering if they understand Google’s true motives here… same as it ever was.

  17. thanks staci, i’m aware of mark cuban’s other holdings.

    my point was i didn’t want to go as far as dan (two commenters above me), but cuban’s argument about bandwidth fails because it extrapolates netflix’s future bandwidth needs “to rule” the streaming universe while assuming that same bandwidth remains a constant.

    not gonna happen

  18. K. Warman Kern Monday, October 25, 2010

    At a recent “Future of Media” forum, the only thing the panel could agree on is that 95% of all content on all media sucks. Figuring out how to distribute the junk on more screens and proving that nobody is watching with ad targeting and tracking technology is not a gamechanger.

    If Google or other technologists wants to contribute to changing the game, there are two things that need to happen:

    Technologists must partner with someone who owns all the rights to a live event, like Mark Cuban or Comradity, to prove that there is exponentially incremental revenue from integrating high production value video and audience participation. Until there is proof that there is a business reason to integrate live video transmission and interactive applications, these dimensions of entertainment and information will be separate and distinct.

    Develop a platform for sharing and discovery which both respects the right of individuals to control the info they share and makes it easier to discover the quality in the long tail. This is what Google promised to do. But we ended up with a system designed to usurp individual control over the info shared to enable 3rd parties to “game” the system so Google could make money. I have no idea why they aren’t using all that cash to figure out how to do what they promised to deliver in the first place.

    Mark is right. It is stupid to treat the 5% of the content that people and sponsors will pay huge premiums to participate in like the junk people will not pay for.

  19. I don’t think Mark Cuban gets the internet at all. Google TV is not a content server, it merely is a search engine that finds web pages (like the network web pages themselves) and lets you play content found through a web browser. No Mark Cuban, you are stupid

  20. I think many of you have forgotten why these streaming services were created to begin with.
    These services are a natural backlash against piracy in an attempt to gain back people willing to pay for content if it is easy enough to do so and offered in a manner the consumer wants.

    Streaming goes away, pirating will increase on a scale that has never been seen before. Streaming services from other countries offering content to people who will pay them for it.
    This nonsense needs to stop. As far as the price of internet going up……….marginal at best. Any smart company would have been building bandwidth over time as it was clear that this day was coming. If said companies decided to take profits at the expense of maintaining and expanding their networks, well they will lose both customers and profit to those who were smart enough to do so. I know I am not willing to pay anymore for internet access and in fact think the price is beyond reason right now.

    Businesses need to start thinking about social responsibility before they start thinking about profit. trust me, if the productive capacity is there, the profit is there. No need to worry about that.

    Another big issue here that no one in the media industry seems to be considering is that you have way more competition than you used to for eyeballs. I as a consumer can play MMO’s for about $15 a month. Get involved in my community for next to nothing. Read over 1,000,000 ebooks and counting for nothing.

    Why in the hell do you think I would pay you MORE for your somewhat dubious video content?

    You people need to wake up and notice the herd of new content producers who are not only capable of competing with you, they are going to come along and gather up your eyeballs and carry them away if you don’t provide something similar to what they are. Many of these new content providers are only doing it for personal enjoyment and or a simple living, thus offer it for nothing, or very cheap. If are unwilling to compete against them you are going to FAIL on an epic level.

    Consumers are going to have to learn that nothing is for free? What a laugh. I can watch youtube videos until I die and never run out. I can read free ebooks until I die and never run out.

    Businesses are going to have to learn to survive on the all you can consumer model or they will be marginalized to the point of bankruptcy.

  21. The trouble with your argument is the assumption that content streaming is measured solely by bandwidth consumed as a percentage of the total.

    Everyone in the world does not want to stream TV at once during prime time.

    Another streaming service’s growth will almost certainly be at the expense of Netflix and the other entrenched players.

    Never mind the fact that you’ve totally missed the mark on what Google TV actually DOES. Sorry Mark, but you’ve got this one completely, moronically, wrong.

  22. Mark, your right on cue and this makes total sense… Funn Networks would like to speak to you. Yes, we’re the one’s who will correct both Netflix and Google Tv.. We’ve been preparing for ten years and have waited patiently for the world to evolve to where it is today.. bob@funnonline.net

  23. Unlike Google and Netflix, Funn Networks brings a new business model to the game, paying content providers more money than any other servive such as Netflix, Google Tv, You Tube and the countless others who failed in the past such as Pressplay, Musicnet and many others…. On avergae, Funn would pay 100-200% more than content owners are currently recieving.

  24. Consumers are just asking for the same content that is available via the PC to be accessed through these conected devices. Secondly I would trade paying for extra gigs delivered, than 300 bucks a month for crap I don’t watch. I’ll pay for what I consume thank you.

  25. Google TV is the next generation of watching tv online.. Read more from here
    http://paidcontent.org/article/419-google-tv-readies-for-launch-deals-with-hbo-turner-nba-cnbc-etc/

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