A Problem of Volume

Mark Cuban on why Internet video has been so disappointing

Mark Cuban has a wide range of interests in the entertainment business. He owns basketball’s Dallas Mavericks and co-owns the Landmark Theatres chain and Magnolia Pictures. And he is the co-founder and chairman of HDNet, a cable network that provides high-definition news, movies and other entertainment.

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He also was a pioneer in online video, co-founding Broadcast.com, an early provider of streaming live music, sporting events and news. Outspoken on, well, just about everything, he famously called the Internet “dead and boring.” He spoke with Walt Mossberg and Kara Swisher about high-definition video and its online counterparts. Here are edited excerpts of that discussion.

Not Stupid, Just Dead

MS. SWISHER:Let’s start by talking a little bit about Internet video, where you started off. How do you look at it? You write various things: The Internet is stupid.

MR. CUBAN:I just say dead, not stupid. I think it’s been a real disappointment to see in the last 10 years how far Internet video has come.

MS. SWISHER:Why is that?

MR. CUBAN:I have no idea.

MR. MOSSBERG:Because certainly there’s video everywhere on the Internet.

Asa Mathat

MR. CUBAN:If you have to pinpoint one thing, you’d have to say when Google bought YouTube. They didn’t get into it with a focus on monetizing it immediately. As a result, it just took off, and the message was ubiquity and volume. And if your focus is ubiquity and volume without an understanding of how you’re going to make money off of it, you don’t pay attention to all [the things that go into that].

MR. MOSSBERG:So instead of saying it’s dead, why doesn’t it occur to you that it’s an opportunity for you again?

MR. CUBAN:Because it’s like fighting Microsoft. YouTube has gotten so big that you’re not a standard unless YouTube adopts you. And that’s a big fight.

Back in Broadcast.com days, we used to say there are no hits, because there’s such enormous fragmentation of media that it’s expensive to get anything to stand out.

It’s ten zillion times worse today than it was back then. So unless you think you can create a platform that out-aggregates YouTube, it’s going to be very difficult. Now Hulu’s done some great things, and they’re focused on monetization, and I think they’ll very quickly get to the point where they’ll be setting the commercialization standards. But they’ve got some big pockets that they have to appease and it’s going to be tough to create the balance there.

MS. SWISHER:Do you imagine there could be hits [online]?

MR. CUBAN:No.

MS. SWISHER:It’s not possible because what?

MR. CUBAN:There are hits, but they’re one-off hits. On the Internet, there are an unlimited number of competitors. Anybody with a Flip camera is your competition.

What makes it even worse is that YouTube is willing to subsidize the cost of your bandwidth. So anybody can create and distribute for free basically, but the real cost is marketing. And that’s always the big cost—how do you stand out and what’s the cost of standing out? And there’s no limit to that cost.

The Net as a Testing Ground

MR. MOSSBERG:Do you watch any Internet video at all?

MR. CUBAN:I go to “Funny or Die” [a comedy video Web site]. We’re doing a show with Svetlana, the Russian Whore and Ambassador, that we’re going to convert to HDNet.

MR. MOSSBERG:It’s a reality show?

MR. CUBAN:No, it’s not a reality show. It’s a scripted show.

MR. MOSSBERG:You’re putting that on HDNet?

MR. CUBAN:Right. That’s what video for the Internet has become. It’s become a testing ground for mediums that actually have revenue.

Where TV Is Going

MR. MOSSBERG:There’s been a big search for merging the television set and the Internet, and now for the first time some of the big TV guys are bringing out beautiful HD sets that have routers in them. Yahoo has done a reasonably nice job with this widget thing. How can that take off?

MR. CUBAN:Being able to take a traditional cable-television subscriber and give them new widget type applications to me is huge. Not only do I think there’s a need for it now and there are unique application opportunities, but (a) people aren’t looking there and (b) that’s really where the bandwidth is.

MS. SWISHER:Where do you imagine television going right now?

MR. CUBAN: We can’t ever forget that the Internet now is just a staid utility. The exciting platforms are software applications that are very, very simple.

That’s where we are in the Net. It’s evolutionary applications, not revolutionary applications.

We’re moving those applications to new platforms, mobile platforms, TVs, which allows us to interact with them far differently than we ever have, and it’s life-changing.

MR. MOSSBERG: So the excitement has moved to the mobile platform. You’re saying TV can be in the same space.

MR. CUBAN: Right, because now a social network in front of your TV using Tru2Way [a technology for delivering interactive services over cable networks] on your Verizon or Time-Warner or whatever it may be, now you’ve got four people sitting there and you can create different types of applications with multiple people sitting there. There’s more bandwidth to create new types of applications.

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