Video startups vs incumbents

Mark Cuban · March 24, 2009 · Short URL:

Any content game that is a numbers game is an expensive play

 How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most? Based on company reports, it seems like people are giving up their wired telephone lines at home long before they give up their cable/sat/telco TV.

Why are DVR sales continuing to climb? If the internet is a better solution, why buy, lease or even use a DVR? Shouldn’t DVRs be immediately obsolete?

Technology doesn’t always move in the direction you expect it to.  Anyone for faster airplanes? The return of the Concorde ? More efficient electricity grids ? More fuel efficient cars? You can blame the lack of progress on the incumbents or their industry, but doesn’t that make my point?

Read this great post from the Netflix Blog. Why do people ignore in last mile and  home bandwidth constraints? More devices at home, more utilization,  more hard drive storage, require more backups, which consume bandwidth, whether local or online.

Why do people think that bandwidth to and in the home will grow faster than applications can consume it?  If you believe in the inevitable progress of technology and innovation then shouldn’t you believe that this collective genius will come up with better uses of increasing bandwidth than replacing TV? I certainly do. Health Care, Security, Who knows what, have to be a better and more rewarding use of bandwidth than just TV.

Always remember that the long tail of content, whether audio or video, never gets paid. That's why it's on the long tail.  One hit wonders do not disprove the rule. Creating hits is hard and very much a numbers game. Any content game that is a numbers game is expensive to play. Which explains exactly why there are so few Internet video only companies (our friends at Rev3 being hopefully a shining exception) making money.

P2P has been around for how many years? It has yet to find commercial success anywhere. It's not a solution to any problem and in fact is a huge risk. Anyone with any sense of fair play knows “free bandwidth” for commercial distribution of content is inherently wrong.

For all those that think there will be an explosion in bandwidth, remember we are in at least a recession, if not worse. Don’t expect any capital to be invested to take the last mile to multiples of current experiences. In fact, you might see the opposite as capital constraints encourage networks to try to manage as best they can with what they have. It could be far worse on the wireless front as lack of capital could shut down installs

Got to love all the give and take. Keep the comments coming.

(Image source: secure.nypost)

Support VatorNews by Donating

Read more from our "Trends and news" series

More episodes