Mark Cuban has a forceful rebuttal to those who think the Internet can replace cable TV as the main source of video for the average consumer, proving again why Cuban is Cuban. Currently, according to Cuban (who cites streaming guru Dan Rayburn), both the technology and the dollars needed to stream video simultaneously to large audiences (which he defines as at least a million users) are out of reach for all but the largest of content companies. It would be cheaper, he maintains, to pay the cable and satellite companies to launch a channel for you. (Mind you, several years ago, launching a new cable channel cost something like $100 million because you had to pay the individual cable operators a per-subscriber dollar amount to put it in their lineup.)
Let’s try to break this down. Rayburn estimates that Netflix pays about $0.03 per GB to stream. So Cuban seems to rest his proclamation on the math that streaming even a 250 MB video (15 minutes) to one million users costs at minimum $7,500. But if you could get a $20 CPM for one ad on that video, that’s $20,000 in ad revenue, which would cover your streaming costs even if your rate was double a large company like Netflix’s. So I’m not totally buying Cuban’s money argument, although these are admittedly cocktail napkin figures. As to his point about technological barriers, Read the rest of this entry »
