Cuban rains on Internet video parade
Posted by Daniel Granof on February 4, 2010
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, companies like YouTube and Netflix have already taken on the streaming challenge, obviating the need for content owners to figure it out.
The bigger barrier may be the old guard combination of cable and telcos that are now the gatekeepers to the Internet and the large studios clinging to their outdated production system. As mentioned in a prior post, so long as they are still raking in money with the current arrangements they will resist change or at least make sure they can control it.
Of course, Cuban also asserts that the demand necessary for Internet video to usurp cable won’t materialize any time soon, and in this he may be right. Very few scripted videos get to 100,000 views, let alone one million simultaneously. It will take several more breakthrough series like Dr. Horrible, as well major sponsors coming on board, before consumers start to feel like they need (not just want) access to Internet video from their TVs.
The upshot? Cuban’s conclusion is probably correct, though perhaps not for all the reasons he gives.
game keys kaufen said
game keys kaufen…
[...]Cuban rains on Internet video parade « The Digitalists[...]…