Marc Cuban Is Psyched About Cable

Cuban is PSYCHED! Hey, it’s not like he doesn’t have a reason to shake the pom-poms for cable, right? He’s also been pretty vocal about his belief that content owners will never give up the fees they get from cable and go to a free online distribution model.

Marc Cuban just told me advances in cable technology are more exciting than what’s happening on the Internet right now.

[From Marc Cuban Is Psyched About Cable – Media Money with Julia Boorstin – CNBC.com]

It’s pretty hard to argue with any credibility that cable is a hotbed of innovation. I look at my Comcast on demand and I’m struck by the fact that the big content developments they have to show off are used car listings. Who the hell cares?

It’s also worth pointing out that Comcast’s on demand services only work with their set top boxes, if you have a current generation flatscreen and want to take advantage of a cable card you will just get a tuner without any on demand capabilities. So much for the mythical cable technology advances that Cuban talks about.

Here’s the core problem with cable operators, they are operating a walled garden where any new content offerings have to come from them in order to reach the last inch between the TV and a person. It’s not just that the distribution network is closed but the development platform as well and this ensures that cable will never be a hotbed of content and application innovation.

Apple’s distribution system for the iPhone is closed but accessible, and by that I mean they have opened up the development tools and provided a low hurdle for access to the distribution capability that is the iTunes App Store. The result is that this is the place app developers want to be and because the flywheel is spinning more consumers want the device in spite of few hardware upgrades.

The cable companies, pretty much off of them, by contrast have little third party developer support and the integration of online to television content is weak, practically nonexistent. Video is the single hottest driver of audience today and the cable companies have done the bare minimum insofar as pursuing this an an online strategy.

To add insult to injury, cable companies have silo’ed themselves based on how content is distributed and have not invested in an integrated advertising sales effort, meaning the online initiatives run ad network content as often as their own sold inventory and because they believe they don’t know how to sell online they simply don’t try. This revenue suboptimization leads to a vicious cycle of underinvestment and experimentation that risks their core business.

Cuban may be “psyched” about cable because he has to given where his investments are but it’s hard, make that impossible, for any rational person to argue that cable has eclipsed the internet when it comes to innovation. Lastly, Cuban is wrong about one very significant part of the argument, bandwidth does not develop to meet applications but rather the expansion of bandwidth leads the development of applications that take advantage of bandwidth whether it be network or processing capability.

All the Time is Prime Time

Like every train wreck, you can see it coming but only at the point of impact does anyone really pay attention to it.

But the more significant shift can’t be blamed on the strike. In the past television season, there has been a sharp increase in time-shifting. Some of the six million are still watching, but on their own terms, thanks to TiVos and other digital video recorders, streaming video on the Internet, and cable video on demand offerings. So while overall usage of television is steady, the linear broadcasts favored by advertisers are in decline.

[From In the Age of TiVo and Web Video, What Is Prime Time? – New York Times]

It’s probably unfair to say television execs are a bunch of lemmings who have no one to blame but themselves. All of the major networks minus CBS have expanded into cable and an increasing number have integrated their online offerings, as opposed to treating them as side projects. In the final equation I think this is less about a new technology, or in the case of DVRs an old technology, altering audience behavior and more about consumer attention spans and competitive activities.

200805121201.jpgIt’s a fact that people watch less television today than they did even just a few years ago, and when combined with the explosion of content that is available and you have a perfect storm that results in substantially greater complexity in attracting an audience.

This complexity is also why television sitcoms have become much more targeted and are allowed a much shorter period of time to develop. The days of a Seinfeld or Cheers pulling down 15 or 20 share are gone and won’t be seen again.

Another dimension to all of this is that consumption of web-based video often happens at work, which may or may not have implications for content producers. I’d have to think that through a little before commenting. But one interesting side observation is the globalizing consequence of web-based video, which of course is not limited to a specific broadcast network and a geography.

- 30 percent of daily video consumption comes from Indians outside of India, largely from the Bay area and New York.

This international aspect represents a phenomenal opportunity for content networks to rethink the way they do advertising to appeal to new audiences online that they would never have the opportunity to reach through broadcast.
In the end the big television network will prosper as new channels for delivering content create new placement opportunities for advertising.

On the production side of the business it is clear that a decade of changes in the way that television shows are developed, financed, and syndicated has resulted in a broad array of content development capabilities across every genre, meaning there is no shortage of content to pump online.

Having a broad portfolio of content and a seemingly endless opportunity to distribute content doesn’t equate to content that audiences find appealing, so if there is one thing that could be targeted as white space at this point, it would certainly be instrumentation of the player endpoints and the content itself to register user engagement and subjective qualitative aspects.