Some Questions & Thoughts re Internet Video vs the Incumbents

= How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most  ? Based on company reports, it seems like people are giving up their wired telephone lines at home long before they give up their cable/sat/telco TV

= Why are DVR sales continuing to climb ? if the internet is a better solution, why buy, lease or even use a DVR ? Shouldn’t DVRs be immediately obsolete ?

= Technology doesn’t always move in the direction you expect it to.  Anyone for faster airplanes ? The return of the Concorde ? More efficient electricity grids ? More fuel efficient cars ? You can blame the lack of progress on the incumbents or their industry, but doesn’t that make my point ?

= Read this great post from the NetFlix Blog Why do people ignore in last mile and  home bandwidth constraints ? More devices at home, more utilization,  more hard drive storage, require more backups, which consume bandwidth, whether local or online.

= Why do people think that bandwidth to and in the home will grow faster than applications can consume it  ?  If you believe in the inevitable progress of technology and innovation then shouldn’t you believe that this collective genius will come up with better uses of increasing bandwidth than replacing TV ? I certainly do. Health Care, Security, Who knows what, have to be a better and more rewarding use of bandwidth than just TV.

= Always remember that the long tail of content, whether audio or video, never gets paid. Thats why its on the long tail.  One hit wonders do not disprove the rule. Creating hits is hard and very much a numbers game. Any content game that is a numbers game is expensive to play. Which explains exactly why there are so few internet video only companies (our friends at Rev3 being hopefully a shining exception) making money.

= P2P has been around for how many years ? It has yet to find commercial success anywhere. Its not a solution to any problem and in fact is a huge risk. Anyone with any sense of fairplay knows “free bandwidth” for commercial distribution of content is inherently wrong.

= For all those that think there will be an explosion in bandwidth, remember we are in at least a recession, if not worse. Don’t expect any capital to be invested to take the last mile to multiples of current experiences. In fact, you might see the opposite as capital constraints encourage networks to try to manage as best they can with what they have. It could be far worse on the wireless front as lack of capital could shut down installs

= Got to love all the give and take. Keep the comments coming

50 thoughts on “Some Questions & Thoughts re Internet Video vs the Incumbents

  1. I have some ideas on this: people get rid of land lines at home because they have their cell phones. These days your rates on a cell phone are better than the rates for a land line, especially if you have a lot of long distance phone calls.
    On the DVR point, you might be surprised by the number of people who either don’t have computers at home or who have computers that are not fast enough to actually watch a full show without it stopping and starting through out. I don’t think the DVR will become obsolete at any point. As you also have to consider the size of a computer screen versus the average size of a TV in most homes.

    Comment by Sarah -

  2. In my view cable isn’t going to die any time soon, with companies combining there services into bundles to attract more consumers it will probably get stronger before it dies if it ever does. Also for what its worth I read an article the other day that stated the US government is preparing to spend $7.2 billion on upgrading the internet. I rote a post on my blog if you are interested in reading it.

    Comment by Matthew -

  3. I was very interested in this article, especially because it’s skepticism comes from someone who actually made it big in the early days of the internet. I have nothing but respect for Mr. Cuban.

    A couple of points:

    Most DVRs have online capabilities. I would suspect that their sales are increasing because they are evolving into hybrid devices that utilize both the old and new mediums. Just because someone isn’t watching a movie on their laptop, doesn’t mean they aren’t watching content from the ‘net, and not traditional broadcast. On my DVR, I have to be connected to the Internet if I want Pay-Per-View. My point is that the TV is basically a monitor these days and whatever device that pushes content to it, will eventually get the majority of it’s content from the internet.

    Right now the early adopters appear to make up a small niche, but this has always been the case with technology – think cell phones, computers, etc… These started off as devices for a select few and were very expensive at first. Thanks to Moore’s Law of Accelerating Returns, it will only be a matter of time before all of the participating technologies converge (bandwidth increases, device affordabilty, better compression techniques, etc.).

    Finally, I believe advertising will be the final killer of television, because the existing rating systems are not as quantifiable as the internet. Internet statics provide exact numbers – we can even track how long someone’s mouse hovers over an ad, even if they don’t click through. As the economy shrinks, advertising agencies will be more accountable to their clients. 3MM viewers on television will cancel almost any show – 3MM viewers on the internet is a raging success. Not to mention the potential to upsell consumers… Say you’re watching a sitcom and you like the song on the end credits? The internet allows you to immediate make a cross-reference sale. Maybe you’re viewing a promo for a show in between commercials? The internet allows viewers to set an instant reminder, or even record the show on the spot, thereby increasing the effectiveness of the promo. Basically, the internet takes the hope and guesswork out of advertising. Ultimately, it will be the advertisers who seek a safer return on their investment through the internet.

    This is going to take time, and even with a sluggish economy, Moore’s law seems to correct itself over time, but making exponential gains during the better years to compensate for times like now.

    Comment by Chevon Hicks -

  4. Wow. I cannot believe that this is coming from someone with your history Mark. Broadcast.com was a forward-thinking, push the paradigm idea… and now? You sound EXACTLY like those morons in the RIAA and the MPAA who JUST DON’T GET IT. Your comments are so old school you might as well be wearing a big colorful clock on a big ‘ol gold chain and rhymin yer rappin.

    A few others have adequately dissected your “points” of interest and your fallacious assumptions, and I think quite satisfactorily put the lie to your arguments. So I have only one remaining item to point out to you: “You can blame the lack of progress on the incumbents or their industry, but doesn’t that make my point ?” Your own words – you ARE the incumbent in the industry – your thinking, your ideas, your logic. Old, tired , and soon to be overcome and irrelevant.

    From MC> Let me ask you a question. How much investigation have you done into non internet technologies ? Why do you think they dont have more of a future ?

    Comment by James V -

  5. Quoting Cuban:

    “…there is no doubt that Hulu, if it doesn’t already, will have…monetizable traffic and greater revenues…”

    “…the more traffic Hulu generates, the more money it makes.”

    Aside from the fact (actually more my opinion based on astute observation) that the majority of television based “free content” is made available by major networks, which has and always will be “free,” if Hulu is generating revenue SOMEONE is paying for it. Just because the end user isn’t bearing the cost doesn’t mean it’s free.

    Comment by Edward -

  6. Pingback: CableTechTalk » Blog Archive » A Lively Debate About Online Video

  7. Currently AOLuk, which is actually run by Carphone Warehouse in the UK, is restricting my 2Mb broadband to 0.25Mb every evening between 5pm and midnight. I think my crime was to download more than 2Gbs one day, though most days my usage is less than 500Mbs. They say there is no cap on the service (hahah). I haven’t used peer-to-peer software on this log-in. I just downloaded a public domain movie from the Internet Archive and a Linus distro.

    The Indian call centre tells me that peer to peer software is ‘not allowed’ on AOL. Well downloads on the BBC iPlayer are by Kontiki which is peer to peer… It’s a total joke and at this rate Mark may have a point.

    Comment by Gary -

  8. I would like to have just a few things on cable on a daily basis and then the option to order additional channels or shows on a daily basis – easily and without a lot of hassle from the cable provider.

    I watch very little TV anymore – it’s all crap except for just a few shows. I might watch a total of 6 hours of TV in a week, but I am on the internet for several hours each day. That is a huge change from my lifestyle just 10 years ago. But I don’t want to just sit in front of a computer all day and then again all night.

    Comment by Penny -

  9. “How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most ? Based on company reports, it seems like people are giving up their wired telephone lines at home long before they give up their cable/sat/telco TV”

    I gave up my wired telephone line in 2003. It took 5 years for the rest of the United States to start catching up with me (the rest of the world leapfrogged the wired line which says something about the stupidity of wired lines in the modern world).

    I gave up my cable subscription almost exactly 1 year ago because I quit my job to start a company. I was fully expecting to go back to cable once I had enough income. 1 year later I am determined to never buy cable/satellite again. I fully expect 5 years from now you will see the same trend as has happened with wired telephone lines.

    I do occasionally pay for content though. I bought the finale to Battlestar Galactica last weekend from iTunes for example. I also watch Hulu and pay for a netflix subscription. I am paying for content with Hulu commercials (i don’t mind!) and via my netflix subscription.

    Your event horizon is far too short here Mark. You speak as if the world is going to switch today when really it is 5 years down the road that internet TV gets massive. The infrastructure is still being built. That is why only 100K have given up cable (where do you get this number as I know 3 other people who have done this?). Once the infrastructure is in place you will be able to eat pizza, talk on the phone and surf channels with just your two hands.

    Regarding bandwidth, how do you come to the conclusion we won’t have enough bandwidth to satisfy security, health and entertainment needs? You are setting this up as a straw man to induce fear without any substantiation of your claim that bandwidth won’t increase fast enough. Cringly disagrees with you: http://www.pbs.org/cringely/pulpit/2008/pulpit_20080718_005261.html. Just as you point out that innovation in applications will find ways to use all available bandwidth, so too will the network magicians at Cisco keep finding ways to increase that bandwidth. At some point there will be a diminishing return for healthcare and security monitoring (I don’t need that dusty corner in my coat closet monitored) and thus make room for entertainment in the bandwidth stream.

    On top of all this, your bias (HDNET) is effecting your judgement of reality. Innovation is not limited to the application side of things. The network, the business models, and the delivery mechanisms will be innovated as well. Realize it or watch your business die.

    Comment by Aaron -

  10. Pingback: Tech Verdict » Blog Archive » Mark Cuban Declares War On Free TV Online… But Misses Out On The Economics

  11. If idiots are going to try and prevent free, on demand, online television video then I’ll just get them from thepiratebay. Pissing off your customers is not a sound business model.

    Comment by CON40 -

  12. Wow Mark, you really are as stupid as people say.

    Comment by el zilco -

  13. Pingback: Mark Cuban Declares War On Free TV Online… But Misses Out On The Economics | SolidWebs

  14. Mark, did you hear about the stimulus? And money going to rural broadband? Wouldn’t right about now be the BEST time for capital to be invested on infrastructure? I don’t have an Econ degree, but I think when demand goes down and supply goes up, the price goes down.

    What do I know? I’m just a caveman. I fell on some ice and later got thawed out by some of your scientists. Your world frightens and confuses me!

    Comment by Josh -

  15. =How many millions will continue to be invested in monetizing internet video?

    Comment by Joe M -

  16. Kevin wrote:

    “Radio stopped doing things like episodic story telling because TV was better at it.”

    Did you ever hear of BBC Radio 4? Every week 4.5m Britons listen to a radio serial called ‘The Archers’. That is about one in eleven of the entire UK population. A million listen to it each month using the radio player on the BBC website. The series has been running since 1951.

    Don’t assume that because something doesn’t happen in the United States that the same is true everywhere else.

    Comment by Gary -

  17. And…

    “Mobile phone company Orange has offered to set up a UK-wide broadband network to meet the ambitions of Lord Stephen Carter for universal access — in return for a share of the radio spectrum owned by Vodafone and O2.”

    http://www.guardian.co.uk/business/2009/mar/23/orange-broadband-carter

    Comment by Gary -

  18. “Don’t expect any capital to be invested to take the last mile to multiples of current experiences. ”

    London, March 23rd:

    “BT chooses 29 locations for superfast broadband: British Telecom has today released details regarding 29 locations (with equates to 500,000 homes) in the UK which will have broadband connections capable of reaching speeds up to 60Mbps. “

    Comment by Gary -

  19. So it is pretty clear that Mark Cuban is not going to be the next Mark Cuban.

    The next Mark Cuban knows the Internet is not dead. S/he is certain that a fifteen year old invention, controlled by no one, simultaneously connecting almost every one on Earth, with ever increasing utility, still offers billion dollar opportunities.

    The next Mark Cuban will apply his/her understanding of “content idiots” and “Internet idiots” and will figure out how to teach both of them to be smart, or force them to retire, or go out of business.

    With any luck, the next Mark Cuban will permanently change the content distribution WORLD (not just the U.S.), will cash an even bigger check than the first Mark Cuban did, and will use some of that money to buy the Golden State Warriors, become the blogwarrior.com, and “the Internet Warrior”, jump the shark, dance with stars, not buy a baseball team every two years, and get fatter, and happier than the first MC.

    And, lastly, as his/her coup de grace, the second MC can come out (on the Internet) and tell us the Internet is dead. (god i hope the next MC is a hot girl! ;)

    Comment by knucklehead -

  20. Pingback: Cutting Cable Out « ThotBlog

  21. World of Warcraft’s update application is at least one successful commercial P2P application. Whether or not it has been a good investment for Blizzard is hard to say, as the public does not know what they pay in per-copy licensing for the third-party piece of the Blizzard Updater. However, they do save money by deploying their updates via P2P. Whether or not it’s been enough to offset the cost of providing software updates via traditional unicast download from Blizzard-operated or third-party servers is unknown.

    Any way you look at it, though, millions of World of Warcraft users get their patches via P2P.

    Comment by Jeff -

  22. I’ve been on Internet only for over 5 years. TV shows I want to watch are available online, or delivery via iTunes. I won’t subscribe to cable or satellite until I can choose which channels I want at a reasonable price. Maybe.

    I don’t think the Internet is a “better solution” because content delivery is delayed (like in Hulu.com), but I can watch the show whenever I can, without having a DVR+cable subscription. Sure, I can Bit-Torrent content, but I don’t agree with that style of delivery.

    I am not overly-geeky where I have Hulu feeding into my TV. It doesn’t make viewing the content better for me. If I’m working on my computer on any number of projects, having the content play off to the side or background keeps my sphere of involvement small. I’m not looking at the TV, going back to the computer, looking at the TV, back to the computer, and on and on.

    There are so many different ways for content to be delivered that there won’t be a one-size-fits-all model. I just don’t want to be tied down to when I have to watch the shows, or pay for useless channels.

    Comment by Michael -

  23. Mostly I agree with the premise that high-quality professional content is hard to come by and demands a preimium and the Internet is mostly filled with crap, however I disagree with many of the technological and business model assumptions.

    Point #1 — that cabel companies are so good at this stuff. Most people hate the cable company, and research shows this. And I point to Cablevision and the Dolan family as primary evidence that nobody should hold the cable industry in high esteem.

    Point #2. Why the assumption that we must always be streaming? There are many technological workarounds for content involving P2P and storage. And the allure of the DVR is that everythign can be stored cheaply. Just give me a massive DVR!! Most video I watch is actually not streaming.

    You can make the case that storage costs are plummeting far faster than bandwidth costs and that most content will be transmitted in the future by either some sort of compressed storage that is unlocked by key or possibly downloaded at night via time-sliced optimized P2P networks working when the bandwidth freeways are free. The only thing you really need to stream are live sporting events.

    If this is true, I’ll keep my cable connection and agree to pay $40 per month to the cable company for live sports only, and the rest of the stuff I will go directly to the content portals themselve and download into my super-smart Internet optimized DVR box of the future.

    Comment by Scott Raynovich -

  24. 1. Most of the time, it doesn’t make sense financially to give up cable TV when you have cable internet. In some cases it costs more to just have cable internet, so there may be some skewness here, although I’m not saying there number is dropping dramatically.

    2. Internet delivery of content hasn’t become mainstream, but the fact that DVRs are in such demand shows that people want to watch TV on their schedule (on demand), which is a step towards content over the internet.

    3. There hasn’t been a huge disruption in the market yet. That’s what it takes for large scale technology changes such as shifting to providing content online exclusively. It’s starting to happen, with Hulu the 4th largest online video site (http://twurl.nl/v027as) and March Madness provided online (in decent quality), which in my opinion is just a better way to watch it. It’s a lot more interactive.

    4. I have no good response for this one. The last mile part of the network is an issue.

    5. This one is true. We are behind most developed countries in connection speed, and with ISPs putting caps on bandwidth lately as well doesn’t help the cause. It’s like we’re taking a step backwards. (I guess this strengthens your point)

    6. [I'm not sure what you are getting at here]

    That’s all I have.

    I agree TV providers will not be going anywhere for awhile, but I still think there is value that has yet to be explored through online delivery of content. Once content consumption becomes more social (like the Facebook/CNN partnership for the inauguration), there is a compelling reason to watch and be engaged (with the content and advertisements).

    As Kevin said about, the internet may not be the best choice for TV, but there will always be instances where it could be, and eventually replace it. Example: In my office, there is no cable hookup, but we have a very fast connection, so watching ESPN360, Hulu, and March Madness during breaks (or even while I’m working) has been quite nice.

    Comment by Geoff -

  25. To answer:

    – A non-scientific poll but the majority of my friends and colleagues are dropping cable for DBS or over-the-top because they are tired of their CATV rates continuing up…Especially, in this economy.

    — Just look at how your CATV colleagues were treating TiVO until it was co-opted by the industry. Someone will know a workaround solution, away from CATV. Nature abhors a vaccum and it’s Chris Columbus all over again.

    — Red Herring! There is a strong desire for on-demand content but pricing is where it will live or die. I retort with one app, Napster. Until the schmucks in the music industry destroyed their only chance to digitally capture their consumers. Hulu/TV.com is a step in the right direction but is still not a credible threat to YouTube, too many silos.

    — Another Red Herring! It’s not “people” it is you folks in the industry. Again, once someone finds a workaround, ex., open-source Hulu/TV.com (but much better, w/Pirate Bay spin), then what will the CATV folks do? Go to Congress? Waaahhh! You are w/what the “people” desire. Go ahead and try to get Congress to do what you want post-AIG.

    — Give me a break! Riddle me this blogMaverick, why haven’t the studios given CATV the Long Tail? Example, the total TV universe is about 120 million. The CATV universe is 80 million. Comcast has about 40-45 million (depends on who does the counting). That is a significant capture of even the total TV universe. Why won’t the studios give Comcast a break? Because Comcast leaks like a sieve! Show me the security! How strong is the CATV universe against cable piracy? I betcha the studios know that number.

    — BTW, the Long Tail can help promote continuing content or actors/actresses.

    — There will always be P2P, doesn’t mean it’s right, just have to marginalize it. That is where the music industry screwed themselves over. Pretending the problems does not exist or trying to criminalize it w/o an approved alternative solution will not work. In fact, it has already failed.

    — You should stop worrying about P2P, with bandwidth the way it is and an ally of net-neutrality in the administration, how long do you think CATV will be able to monopolize the wires? Try too hard and bring on the anti-trust folks.

    — I just want to watch, what I want, when I want, where I want. Whoever can provide the service for a nominal fee w/o nickel-and-dimeing me to death and keep it high quality with maximum depth of content will rule the TV universe.

    Comment by P. Lee -

  26. *= P2P has been around for how many years ? It has yet to find commercial success anywhere.

    Last time I checked World of Warcraft makes a billion dollars in revenue per YEAR, and distributes their updates through p2p.

    Comment by Lexi -

  27. Isn’t the fact that we are even having this debate evidence enought that the trend is not only shifting, but growing? I’ve been without a cable/sat provider for so long now these conversations just seem old to me now. Further, I continue to gain increasing quality of content and flexibility. My current conundrum, you’ll laugh. I’m just trying wether to decide to drop my current cellular provider (T-Mobile) for one with a better data network. Why? Better mobile video, of course.

    Comment by BillFitz -

  28. I just finished setting up a MacMini and connected it to my big screen. I am going to get rid of digital cable and lower down to the basic package that costs 11 bucks a month, mainly because if I cancel cable TV all together my cable internet price goes up by more than 11 bucks a month. I will still get all the local channels and the OTA HD channels without paying for a box or putting an antenna on my roof. I am mainly doing this as an experiment out of my own curiosity to see if there is really enough on the internet to keep me entertained and still allow me to watch the shows I want to watch. So far after the first weekend of using the MacMini and not turning my cable box on except to watch CBS I can say that I won’t miss the channels that I pay for on cable. Combine the internet stuff with Netflix and their instant streaming and I can watch pretty much anything I want without being tied down to 120 bucks a month for cable. I will probably go back to cable, but who knows I may not. I don’t think anything will change in the next few years, but hopefully another company like Verizon will get into the game and allow me to negotiate with my cable providers and get the best price they are willing to offer to win me over as a customer. I successfully negotiated last year to get every channel my cable company offered and the DVR and HD box for 80 dollars a month, so to say they are losing money be charging less is probably a lie. Now that we consumers have more and more options they are going to have to lower prices or else we will just switch to the cheaper or more feature packed service. The days of Comcast being the only choice are over and if they don’t wake up to that fact, they will lose even more customers.

    Comment by Bill -

  29. I cut cable (Direct TV to be precise) In April of 2004 after my son was born. I found I liked have complete control over my son’s media inputs. I don’t have to deal with him asking me for toys, asking to seeing Hannah Montana or any other crap associated with marketing. I purchase my movies (typically with trade credit scrounged from my used book business) or use Netflix. He has a library of about 100 videos/DVDs and this is more than enough.

    Recently, I set up a media server in my house and stream Hulu and Netflix to my television. This is a bonus, not a tradeoff. I will never pay for television content at a clip of $60/month – I cannot afford it, I don’t have time to waste sitting down at an appointed time, and the ads are a pain in the ass. I’ll pay for the Internet connection necessary for my wife and I to work and if entertainment comes through, so much the better.

    If content providers want me to watch, use the Hulu model – I can tolerate those commercials. But I have no interest in having my children seeing advertisements, so I don’t foresee adding cable/satellite in the future.

    Comment by Ian M. -

  30. Nice job of changing the subject over on the boxee blog. The point is customers want choice. I don’t want to pay for CSPAN.

    Mark Cuban=out of touch

    From MC> You dont pay for CSPan

    Comment by Josh -

  31. Damn, I couldn’t find the email where you convince me you couldn’t shoot a three pointer while doing a back flip. Those were the days.

    My guess is the new “thing” won’t come from America this time, which saddens me and I think it’s more imperative than the economy or Entertainment. What about you?

    Comment by Alex Leverington -

  32. Pingback: RE: Some Questions & Thoughts re Internet Video vs the Incumbents « this will be changed

  33. It is inevitable that the internet will continue to be a bigger part of our lives. Every person born in the last 10 years or more has not known a world without personal use of the internet on a regular basis. I think this generation will find more and more uses, especially as wireless devices become cheaper and more capable.

    Comment by Paul D -

  34. There are people who will download music and burn cd’s and there are people that continue to buy cd’s. There will be people who just watch TV online and there will be people that continue to pay for TV. It’s a matter of preference. That was the best analogy I thought of at the moment haha.

    Comment by Perry Belcher -

  35. “= How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most ? Based on company reports, it seems like people are giving up their wired telephone lines at home long before they give up their cable/sat/telco TV”

    * Anyone who speaks a language other than English or Spanish and has an internet connection. Every Indian and Chinese person studying or working in the states that wants to see content from back home. Whole series of Turkish soap operas, for example, exist on the net because of the large Turkish and French communities (not to mention Canada and America.)

    * Many of a religious minority or of no religion. Atheists have a large community producing content online. The new age community has been creating content for each other for decades – we’re starting to see this on the internet.

    * I still can’t get Al-Jezeera on cable in the States. It’s better than any of the cable networks I can get, but any cable company would be skewered by adding it to its lineup.

    These communities haven’t all migrated over to internet-only viewing yet, but many have. (Indian and Chinese students have in many cases.) The only pieces I see as superior are live events. (That said, I watched more of the NCAA event from my computer than from my TV because they weren’t playing the games in which I was interested on the television.)

    Personally, my budget is tightening and it looks like I may be canceling cable myself. I can’t say there’s much that I am worried I’ll miss, other than sports. (And frankly, that’s time I can use for my new business.)

    Comment by Eric Biesterfeld -

  36. I am so tired of people bashing the cable providers! There is SO LITTLE understanding here.. “The cable company” does not have final control of the rates.. the Big Movie houses and Sports teams have more control of the price than the Cable Company does.

    No offense Mark, but the price you play your players has a DIRECT effect on the bottom line of ESPN and then straight into the bottom line costs of the Cable Company. The cable company has no choice but to pay it or start losing subscribers.. the costs then are spread across all of us, even those of us who don’t watch sports.

    The BASE salary for an NFL player in 2007 was $285k/year.. the total base salary for all the players (1820 of them) was $1.7Billion (with a B)!! People really need to wake up. The $10m+ that your favorite actor just got paid for their latest movie.. that’s going to end up in your Cable bill, even if you didn’t watch the movie when it played on “free” NBC.

    RIAA and ASCAP promote the concept that performers should be paid for their work just BECAUSE they performed, and that THEY should set the price. We must break that cycle! GOOD work should be paid for.. not just ANY work. Allow the free market to set the price!!

    We need to put the “price blame” where it belongs. Just because they are big does not mean that Comcast,TWC,Charter are evil.

    Comment by Tom -

  37. These comments are too funny. There is no economy of scale on 99% of the internet. Does anyone even conceive how much money it takes to produce a show like Heroes, or even American Idol on TV? A typical show on TV costs $1.5-2mm per EPISODE. A typical pilot for a drama series is around $500K-1mm to produce. The Show ER cost upwards of $13mm per episode at one point during it’s popularity. Imagine what the show Lost or Heroes cost?

    Another thing to consider, a show like American Idol gets around 7 million viewers in a SINGLE showing. 99.9% of the internet sites out there do not even get that many viewers in a single month on the internet. Advertisers are paying for that reach on American Idol. Hulu and others on the web will never be able to demand the type of revenue that a TV broadcast network could.

    Why in the world would someone producing that content want to give it away?

    Put things into perspective folks…

    Comment by Ian Bell -

  38. —I posted this comment in the last thread, but I thought I should repost it here—

    This is a fascinating conversation, but I think that maybe we need to look at the issue a little differently.

    When radio came along, it tried to act like a newspaper. When TV came along, it tried to act like radio. Now the internet is here, and it’s trying to act like TV.

    One medium is better at some things than another medium. For instance, when TV came along, radio didn’t die, it instead evolved to focus on the strengths of the medium. What’s radio better at than TV? Music and call-in talk radio. TV sucks at those things. Radio stopped doing things like episodic story telling because TV was better at it.

    The internet will never be as good at tv as tv can be. The internet will eventually figure out what it’s good at and will beat tv at whatever that happens to be. In addition, tv will need to figure out what it’s better at in order to survive.

    And when I say “better at”, I mean in the types of content it delivers.

    For instance, I’m sitting here right now watching the NCAA tournament. Normally, I watch whatever I have on my DVR, fastforwarding through the commercials, but I’m watching the tournament live…and I don’t even mind the commercials. They give me chance to go take a whiz, make a sandwich, or whatever. I can only watch sports live…I have NEVER DVRed a sporting event.
    Consequently, I think it’s safe to say that TV is the best medium for viewing live sporting events.

    What’s the internet better at? The news. I’ve never seen your Dan Rather program, but I hear a lot of good things about. However, I can’t even begin to imagine how it can do news better than the internet. TV, as a medium, is just too limited to do a good job at giving me news. It’s like the difference between watching a sporting event on TV and listening to it on the radio…it’s no contest. I’m sure your Dan Rather program is good, as far as TV news goes.

    The internet will eventually stop acting like TV and establish it’s own identity.

    So, here’s my point. Content producers need to figure out which medium is better suited to their particular type of content. News, sports, sitcoms, etc. Each is better suited to one medium or another.

    The TV completely transformed our culture, and the internet will do the same, even though it has a long way to go. The people who will profit are the ones that can see where the paradigm shifts are going to occur and get there first. TV Everywhere is not properly addressing these shifts. It is still operating under the TV paradigm, and it will fail.

    Comment by Kevin -

  39. Mark,
    Quick answer to one of the questions: the only reason why I am still keeping the cable box – live sports and I use the DVR to watch it at my own pace.

    Sincerely,
    Tim

    Comment by Tim Nikolaev -

  40. Mark, I reluctantly must admit that you may be right this time. We should never underestimate the ability of business to suppress technological advancement or deny consumers what they want in the name of protecting their own entrenched revenue models.

    Comment by rworkman -

  41. I’m a little confused why we keep talking about voice, cable, satellite and internet access as if they are different things or that any of it is ‘free.’ First – All do the same thing – deliver and send bits more or less. Second – It’s really a question of who is getting paid for what. Order DSL and you are only paying for the pipeline and what others are willing to shove down it without compensation from the pipeline. Order cable and you get what others are willing to shove through WITH compensation from the pipeline. These are simply different distribution models that are competing to see who wins.

    Folks who are giving up cable for internet don’t see any value in the additional programming value/quality offered by the cable provider. Not a huge surprise since a large number of folks lack real love of TV to begin with – $100 bucks a month is an expensive way to deal with your Battlestar Galactica fix…(oops, need to replace that with something else now) The cable provider will fight back by trying to lock in exclusive content – just as cable has competed with satellite and broadcast for the past half century. The fact that this is incredibly irritating is kind of irrelevant, it is a methodology to extract commissions and cash from us poor under-entertained tube addicts.

    Options to pay only for what you use are pretty well established – Dial up for ten bucks, DSL for $30, Cable programing for $80…

    Comment by Fred H Schlegel -

  42. Pingback: Daily Research » Shared Items - March 22, 2009

  43. There are two issues that need resolving before multimedia over internet protocols start to dominate. 1) Where to put local caches. DVRs could be part of this solution. 2) Standardizing media consumption meta data so that this experience can seamlessly extend across disparate devices. Apple is benefiting from the advantages of a closed system right now but has not exploited this idea yet since its solution lies in the clouds. Some good standards along with open solutions from the likes of Android, Symbian, and Palm could provide a lot more momentum than we are seeing today.

    Comment by sarcastic guy -

  44. Excuse my ignorance on the subject. Don’t I already have plenty of bandwidth in the “last mile”? The Fiber optic cable comes straight into my house. 20Mbps down and 2Mbps up. And its cheaper than my cable service.

    Are you saying that’s not enough bandwidth or are you saying that it will take a long long time to get fiber service to the majority of us?

    I haven’t completely ridded myself of traditional cable. I’m typing this message with wireless keyboard on a big screen TV connected to a PC while watching an NBA game in a small PIP window (via cable box) down in the bottom right corner.

    The only things I really use the cable company for is live sports. Plus I DVR Real Time with Bill Maher and Austin City Limits. I don’t use a DVD player anymore. All movies are watched using the PC and big-screen TV / surround sound receiver.

    My biggest complaint with my current setup is that I can’t save anything from cable TV to my PC hard drive. I want a permanent copy, one I can clip, edit, share, etc like I used to do with CD’s and DVD’s. Instead I have to use the content according the cable company’s DVR rules. Things older than 6 months seem to “fall off” the DVR. This is really a big deal to me. I’ve lost half of my live music collection from my DVR. I want it on the PC where I have more control, more options.

    And I hate the Guide Menu on my cable box. HTML guide would be much better using a mouse and keyboard – I could navigate/search much more fluidly.

    Comment by Jeff in Dallas -

  45. I meant to touch on your statement of why the Internet isn’t a la carte…
    If you really go to 7 text websites, you have the option of paying less.. you should get dial up.

    The thing with the Internet is that I pay for it, and I get the option to have everything! All of it that’s out there I can get to. The same is not to be said for cable, I pay for the most premiere service and there are thousands of programs I don’t even have the option of getting for any additional price.

    Comment by Randall -

  46. Is Cable/Sat TV a better option than watching shows on the Internet? Yes. What you are failing to understand is that you can watch shows on the Internet for FREE while on cable you have to pay WAYYYYY too much to actually get the better experience.

    Cable/Sat are the latest fat cats to not understand that what they are selling is being consumed for free legally/illegally, the content providers do get it and are making it available for FREE. They want to keep their shows alive, and recognize the new technology available is the means to save them from becoming newspapers. You as a content provider are different, you have to go with the delivery that keeps you in HD, otherwise your brand has no value, but all the other content providers need to just stay relevant and sell any advertising they can.

    It may not be my cable companies fault that they have to pay $3 per subscriber a month for ESPN, but they sure aren’t doing enough to change it. Notice that, notice that Cable/Sat ISSSSSS A La Carte, has been for years. We pay for each channel individually, whether or not we want it, whether or not we watch it. I pay 140 a month for the most premiere service Charter offers, because in order to get the channels I do watch, I have to add on service after service.

    If Cable is the most high tech option and the future, why aren’t they giving me a premiere package. Why do I have to pay to get HD? Why do I have to pay more to get an HD box? HD is THE standard, stop charging more for it, stop charging more for DVR’s too. People are getting tired of it, there is no competition in the industry, if this is the elite delivery method GIVE me the elite tools to utilise it… otherwise I’m going elsewhere. The Internet may not be equal in terms of content delivery, but it’s not ripping me off like Cable is. The blame is on the greed of the companies selling service, and a smart content provider is realising that is a blockade they can get around.

    Like someone said a while back… OTA HD is higher quality than what I get on cable, and 90% of what I watch is available on OTA. The real fact here is my TV won’t be solely connected to my MacBook when I cut cable, but I’ll have my OTA HD and an HD TiVo that put me back about a month worth of cable. There are finally options out there, and Cable (and you) should figure that out sooner rather than later.

    Comment by Randall -

  47. Haven’t read all the back and forth but I hope one of you have mentioned that new technology rarely supplants old. Both continue to exist. Longer form internet-distributed entertainment content will take hold it just won’t look like TV. There will be a revenue model but it won’t look like TV. TV didn’t kill radio. It certainly changed it but lots of people still listen to the radio. And when you talk about revenue models it’s important to remember that radio, tv and news have all been through many iterations themselves. The online producers will solve “last mile” of revenue. But it won’t be end of cable.

    Hope I haven’t missed a larger point in this discussion.

    Comment by Scott -

  48. Mark, all your statements sound like history started last week and will end the day after tomorrow. I am sure your arguments could have been made about any established, entrenched technology. For instance: land lines vs. mobile telephony, broadcast vs. cable and even SD vs. your beloved HD. Sure the infrastructure does not support a replacement of IP-based video vs cable right now. But demand will drive (as it always has driven) the build-out of consumer residential services.

    In the above examples, have any of those techs outright replaced the other? No. But they all fall somewhere on the spectrum of realistic competitive products.

    And speaking of the recession, you should do a poll of your readers: in what order would they terminate their utilities during a personal cash crunch? I think you’ll find most people would cancel cable before internet. Would you?

    Comment by Burnie Burns -

  49. well you asked a lot of questions there…
    I dont have 20 minutes today to answer them all so ill just pick one.

    = How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most ?

    I cant give you a definate figure and but I will say that one of my family members and 2 of his “rentors” have done that transition.
    Its certainly not for everyone, but there is a niche there… and if I know of 3 people. then the real numbers out there are certainly more than 100k. (cause these guys are the most geeky technical types out there)..

    thx.

    Comment by savednoteguy -

  50. I agree somewhat. The transition we’re in will take time. But being a long tail producer with hopes of being a short tail producer, I have found incredible value by using the Internet. And people (younger especially) are slowly changing their habits and spending more time watching content online and less watching it on TV. Over time, this will definitely continue to devalue the effectiveness of advertising.

    Comment by Hunter Weeks -

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