Cuban Won't Stream HDNet

ATLANTA -- NCTA National Show -- HDNet founder Mark Cuban pledged to the cable industry here Tuesday that he would not use the open Internet to distribute his company’s high-definition video content.

“You’re never going to see a streaming HDNet,” Cuban said. One of the cable executives sitting next to Cuban asked him to "promise.” And Cuban did. (See Broadcast TV Will Never Die.)

That's pretty interesting, coming from a guy who made his fortune building a streaming media empire. Cuban founded Broadcast.com, a company that broadcast sports games, conference calls, presidential debates, and loads of other things via Internet streaming. The company was acquired by Yahoo Inc. (Nasdaq: YHOO) in 1999 for $5.7 billion in stock.

But Cuban's latest venture is HDNet, billed as the first all high-definition (HD) television network. And the rules are definitely different in a high-def world.

In the panel today, Cuban spoke to the increasing anxiety of many Internet businesses that bandwidth scarcity in the last mile might impair the delivery of content or services. (See Video Is the Internet.)

“Why would I want to stream video on the Internet when I can’t control the user experience?” Cuban asked. “When I don’t control the last-mile pipe, particularly in the HD universe, you can be a victim of your own success and disappoint your customers.

“I would much rather go with my partners,” Cuban said, gesturing at the cable executives on the stage with him. “I would rather partner with you because you can control the service over the last mile."

Of course Cuban didn’t get much argument from the cable guys on the panel. “The Internet really isn’t built to distribute mass-market video,” said Cablevision Systems Corp. (NYSE: CVC) COO Tom Rutledge. “If you really want to do video you have to be partnered with the cable industry.”

“It’s all about QOS,” added Cox Communications Inc. president Pat Esser. Esser took the opportunity to remind the audience that no cable company has ever, ever even thought of blocking or impairing Internet packets of any kind -- not even from competing Internet video services. (See Net Neutrality Debate Wydens.)

Cuban's remarks run contrary to what a lot of content makers are saying here. Increasingly, many content owners seem willing to try the Internet for distributing video. A spate of content deals have been struck during the past year between large content providers like Disney and Internet video storefronts like the Apple Inc. (Nasdaq: AAPL)'s iTunes store.

Both Disney Media Networks co-chair Anne Sweeney and NBC Universal Cable president Jon Zaslav said on panels here that their companies want to reach beyond traditional broadcast and cable TV models to market their content.

“A broadband download might mean watching video on your computer today, but six months from now it might mean watching that content on your television,” Zaslav said. “Watching TV on these remote devices might turn out not to be such a big deal, but video piggybacking on broadband might turn out to be game changing."

— Mark Sullivan, Reporter, Light Reading

CoolLightGeek 12/5/2012 | 3:57:23 AM
re: Cuban Won't Stream HDNet Scott,

HD will come across the Internet and for now, it does not have to be realtime streamed.

If most of the value from the content is the visual stimulation, that is, the intent of HD, then compromises on streaming or display quality are just defeating the whole purpose.

LRTV would need to film in Hawaii or actually show vendors equipment close up before I would start desiring HD content from you guys.

As you are, the lower resolution is actually quite flattering ;)

DCITDave 12/5/2012 | 3:57:23 AM
re: Cuban Won't Stream HDNet re: "Broadcast.com.. as far as I can tell... went NOWHERE!"

i've seen his house. the size alone would suggest otherwise.

the ted turner analogy is spot on, though. being the mavs owner IS his celebrity right now and that alone opens more doors than his HD programming.

sunra 12/5/2012 | 3:57:24 AM
re: Cuban Won't Stream HDNet Umm Scott, HBO and ESPN already have HD channels. While HDNet isn't ecactly offering cutting edge programing it has more than bug shows: NHL games which are way cool in HD, plus a limitied but eclectic selection of movies in HD. People with HD displays are dying for something to watch, and with only about 5 non-premium HD channels HDNet is filling a void.
Scott Raynovich 12/5/2012 | 3:57:24 AM
re: Cuban Won't Stream HDNet Yeah I dunno. Broadcast.com.. as far as I can tell... went NOWHERE! Plus, the stock picks on his blog really suck.

He does know how to run a Basketball franchise, that's for sure. Maybe he's going to try to do the Ted Turner thing.. use the sports franchise to leverage his media empire.

Scott Raynovich 12/5/2012 | 3:57:24 AM
re: Cuban Won't Stream HDNet Yeah I get ESPN HD. But from what I've heard from the HD geeks, it's not "real" HD (like half resolution). And not all the programming on ESPN HD is full size.

What I'm saying is at some point in time, probably in the next 3 years, everybody's programming will just be in HD and that will no longer be a point of differentiation. I mean, really, it's just the type of camera and transport you are using!
DCITDave 12/5/2012 | 3:57:25 AM
re: Cuban Won't Stream HDNet yer looking at it from a content pov, boss.

cuban's genius at broadcast.com wasn't the content -- it was in being the first, and exclusive, distributor in a new medium. that's how he locked the NBA for the Internet broadcasting rights to all their games for so long.

HDNet, because it's only available in HD, is Cuban's way of getting a channel picked up by all the Dish providers, and most of the cable guys and lots of IOCs. It's distribution.

He'll make more money off sending around cheap and the cheerful HD shows he does originate than we can imagine simply because it's the only game in town.

But, when HDNet ceases to be the only game in town, his pull with the mavericks and some movie distributors will mean he'll go back to locking up exclusive distribution deals again. and he'll make another billion or so on that.

not that i'm jealous or anything.

Scott Raynovich 12/5/2012 | 3:57:27 AM
re: Cuban Won't Stream HDNet Let me toss something out here:

Isn't the whole concept of HDNET kinda silly? It's like when they came out with color TVs, you would declare yourself the "Color TV Channel."

HD is just a technology, not a content vertical. Folks like NBC and ESPN will just port their content to the next level of HD. If Cuban is smart he will focus on content in niche and growing areas like Spanish-language programming and organic farming -- where nobody has anything. Rerunning footage of swimsuits models at Best Buy has its novelty right now, but as soon as HBO, ESPN, and MTV have their own HD content it won't matter anymore.

CoolLightGeek 12/5/2012 | 3:57:30 AM
re: Cuban Won't Stream HDNet Why-

8 track tapes had at least a good 8 years, but is now historically are looked at as an inferior technical gimmick. IMO, video with a 1 degree field of view and sub-DVD quality pixels will go the same way.

Lots of companies made good money on 8 tracks and I don't begrudge them one bit. Lots of money can be made on technical fads and fads can be appropriately evolved into tools that stand the test of time.

Historically, low quality display of high quality content will be viewed as a fad and a compromise- Do you really want argue against this? iPods are great for music because their technical capability is passable and the portability makes them easy to integrate into a multitasking world. Good movies and other premium video are not meant for multitasking- they are meant for immersion. TV shows that are not especially visually stimulating are fine to watch (actually most consumption is actually listening to these shows) using a small pixelated screen.

But again, I'm a HD elistist. It used to be that AM radio was "fine" quality for listening to music.

Timing and strategy is not everything to me. Selling something to someone you will know will end up with "buyers remorse" may make you rich, but it lacks integrity. Sony is recognizing this and there is talk of pulling the plug on the UMD format movies for PSP. IPod Video quality is embarrassing bad when compared to PSP.
Portable 6-9" DVD players are doing much better than either iPod or PSP. Laptop PCs with DVD do better still.

Premium video is intended for the largest and best video display in the theater or in the home theater. Everything else is curently a very significant compromise.

whyiswhy 12/5/2012 | 3:57:33 AM
re: Cuban Won't Stream HDNet Cool dude:

I say there's a ton of old movies that would generate nice revenue from a cheap device in NRT...for $1.99 each. And it does not have to be HDTV, but it could be. And it does not have to use big pipes, but it could. And it does not have to be RT, but it could. All in time.

Timing is everything. So is strategy.

They call it IPOD.

danielsk 12/5/2012 | 3:57:35 AM
re: Cuban Won't Stream HDNet Caveat though, IPTV needs to really work on the MPEG4 tolerance to packet loss in even a closed IP network. Stick to the highspeed 100 mbps pipes for now.
MorningWd 12/5/2012 | 3:57:38 AM
re: Cuban Won't Stream HDNet Cuban states that he wouldn't stream HD because he doesn't control the end user experience. I agree that this would be the case in streaming such as what Disney announced the other day (which I don't think will work because of the QoS issues mentioned in this article). What I would point out is that the article paints the picture as if Cuban is saying that he wouldn't allow HDnet over IPTV. IPTV is a closed solution that does control the user experience through last mile QoS. QoS is why carriers need to create different service levels for the different traffic types. If the end-user experience was not satisfactory, no true broadband application would succeed.
Lite Rock 12/5/2012 | 3:57:42 AM
re: Cuban Won't Stream HDNet CLGFR,

"By the way, I've become an HDTV bigot:"

"By the way!" Your understandable bigotry should should take a more prominent place in you comments. Oh trust me, I see the pixels.

Once you've had the best forget the rest.

I can't even bring myself to drink a bottle of wine that has scored at less than 91 ;-)

Many would say you are a leader in the conversion to new technology and applications. Some would say you are breaking wind for the rest of us.

You are ahead of the curve and I will not ask you to slow down. As noble as the socialistic among us want to be, profit will ultimately rule the day.

CoolLightGeek 12/5/2012 | 3:57:44 AM
re: Cuban Won't Stream HDNet Lite Rock,

By 2016, you will definitely see most premium HDTV movies for internet download for $4.99 or less.
iTunes turned CD industry on its head:
Its ludicrius to think the same thing won't happen to Hi-Def video content.
Once content is made, the goal always becomes making a buck off of every last consumer. Every content provider has his price, even Cuban.
He and others might leave fresh content (under 24 hours old) exclusive to his premium cable buddies, but commerce always gravitates to the lowest cost reasonable quality mechanism.
All delivery systems should assume a high capacity/quality DVR is becoming a typical part of the solution (whether cable, IPTV, or Internet).
Convergence is happening in the living room: people will become even more source agonstic than they already are- PC/Internet connectivity to the large screen in the living room will become as common as DVD connectivity. Cable or Telco Content "choice" will seem myopic compared to the breadth of premium choice that will become available off the Internet.
The basic channels/local news/local sports will come from the cable and telco guys- but they better leave capacity for a 10 Mbps for internet download. The DVR will take care of any temporary throughput issues.

Wake up and smell the pixels.

By the way, I've become an HDTV bigot: I won't watch Lost episodes off the internet until they are available in HDTV quality for my big screen.
Video on an iPod or a PSP is downright unpleasant to me (and especially so when I know what the original content is actually intended to look like). Its worse than forcing an audiophile to listen to their favorite song via music on hold.

"Ill" Duce 12/5/2012 | 3:57:45 AM
re: Cuban Won't Stream HDNet Well, I can't get HDNet via cable and I live in Cuban's hometown. I do see it at the Best Buy and it seems really great if you dig bugs.

It seems to me that everyone in the cable business is thinking that people want to plop down in front of a television at a specifed time to receive a content stream. I think the market has moved beyond location shifting. The personalization of media extends beyond the content, it's a function of time, place and content. It's ironic that Cuban, he of the paradigm-shifting, disruptive, DNA breaking 2929 productions, would stick to such an old-school thought. Then again, having a friend like the MSO's gives him a greate outlet for his films, eventually bypassing theatres altogether.

Since when does he care about the experience? He formed Broadcast.com when OC-12s were considered backbone pipes, and 56k was relatively fast. If the internet pipes are based on the existing TDM and SONET infrastructure and that infrastructure is being replaced with IP and striving for <50ms hits and five9s reliability, I find his argument specious. Besides, aren't the MSOs moving to IP as well? And arent't they also moving into WiMAx and Wifi? Hardly carrier class.

materialgirl 12/5/2012 | 3:57:45 AM
re: Cuban Won't Stream HDNet Dera Seven:
In my perfect world, we would have regulators who understand the importance of fat, cheap, pipes in the service of overall economic development, like highways. To this end, they would assist in building the fattest, most economical, network technically available at the time. Connectivity as an "essential service" if you will.

In my mind, this "assistance" means granting a local monopoly, since network rofits are a function of penetration. I do not believe that carrying IP traffic will yield any more profits to service providers than airlines do to their shareholders. Rather, it is the ultimate commodity. I am, after all, a material girl. I want profits too.

So, in return for this local monopoly, the carrier would have to put up with regulated rates, in exchange for a "fair" profit. This model attracts utility types.

I understand this has been tried before. It was how we got the world's best telecomm network, until recently. I do not think this is simple to pull off, only that it is necessary. I do not expect anyone to lay pipe or maintain operations for free. However, if we sacrifice the open internet to a mis-guided content distribution model, our fragile hold on economic dominance will evaporate even quicker than is now imagined.

After all, the folks in China are smart, and work harder than we do. They are not, however, free to communicate or innovate. If we are not free to innovate as hard as we can, they will copy everything we do, drill the price to zero, and leave us with nothing. The Indians are likewise smart and hard working, if not a bit more innovative. If success in a shrinking global service economy will be a function of innovation, limiting our innovation engine, our open internet, seems like economic suicide.
DCITDave 12/5/2012 | 3:57:46 AM
re: Cuban Won't Stream HDNet re: "That's not to say he wouldn't allow non-real-time downloads."

Even if HDNet allowed downloads, he still couldn't control the end user experience -- not the same degree as a Dish Network or Comcast.

I think the larger problem with HDNet now is that there's nothing good on it. The original programming is derivative -- not riveting. But it is pretty...

johncom 12/5/2012 | 3:57:46 AM
re: Cuban Won't Stream HDNet Listen carefully to Cuban's words. He won't stream HDNet. That's not to say he wouldn't allow non-real-time downloads.
rjmcmahon 12/5/2012 | 3:57:46 AM
re: Cuban Won't Stream HDNet Didn't Yahoo close down most of broadcast.com? Maybe Cuban's perspective is coming from that outcome.
paolo.franzoi 12/5/2012 | 3:57:47 AM
re: Cuban Won't Stream HDNet

Can you outline why a carrier would invest in fat pipes? I believe you have constantly said that these carriers will continue to be pipe providers. If so, and there is no money to be made in laying down fat pipes then why will anybody do it?

Lite Rock 12/5/2012 | 3:57:47 AM
re: Cuban Won't Stream HDNet So much for "Open Systems"! :-)

If Mark says it, it must be true.

It is all a matter of what the consumer is willing to tolerate. Standard broadcast, yup, HDNet, nope.

materialgirl 12/5/2012 | 3:57:47 AM
re: Cuban Won't Stream HDNet Folks get confused about change, that is always slower than you think near-term, but faster than you think long-term. Just as PCs went from 8-bit processors with 512k of memory, to the monsters of today, broadband will grow faster than we think in the long term, if not in the short term.

The correct strategy is therefore to position yourself now for a world where the pipes are fat, now. Staying with an old business model for the sake of HDTV seems backward. Another strategy would be to stream something barely watchable, but hip. Learn how to operate in the new environment of user control, then slowly become unbeatable while no one is watching. That is what GOOG and MSFT did.
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