Comments on: Think the Internet Will Replace Cable? Read this First http://wallstreetpit.com/13783-think-the-internet-will-replace-cable-read-this-first Tue, 22 May 2012 19:21:52 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: mark cuban http://wallstreetpit.com/13783-think-the-internet-will-replace-cable-read-this-first#comment-94940 mark cuban Fri, 15 Jan 2010 01:21:56 +0000 http://wallstreetpit.com/?p=13783#comment-94940 the math for an apple tv is not nearly as good as you think . Most industry people think that Netflix pays about 5c to stream a 90 min movie. Extrapolate that out and say that its 10c per 3 hours. Thats 80c per day. Thats 24 dollars per month. Now you might think that Apple will just ask to be allowed to deliver each show ala carte ie, on demand. That would destroy all the other subscription deals they have with Comcast, Verizon, Directv, etc. Who would all ask for the same thing. And in comparing live vs on demand. Its the same thing. An over the top video has to be posted at some point and "go live" Thats when most viewership takes place. Finally, most networks and content for TV producers arent stupid. They had plenty of archival content to give Hulu and Youtube to make it viable. They wanted to experiment and learn how its consumed. But as they do new deals with MSOs, satellite providers, etc, those people are restricting what can be offered. Which is why Hulu will have to go subscription for new content. The pricing for which, when added to an ISP bill will make Cable look cheap the math for an apple tv is not nearly as good as you think . Most industry people think that Netflix pays about 5c to stream a 90 min movie. Extrapolate that out and say that its 10c per 3 hours. Thats 80c per day. Thats 24 dollars per month.
Now you might think that Apple will just ask to be allowed to deliver each show ala carte ie, on demand. That would destroy all the other subscription deals they have with Comcast, Verizon, Directv, etc. Who would all ask for the same thing.

And in comparing live vs on demand. Its the same thing. An over the top video has to be posted at some point and “go live” Thats when most viewership takes place.

Finally, most networks and content for TV producers arent stupid. They had plenty of archival content to give Hulu and Youtube to make it viable. They wanted to experiment and learn how its consumed. But as they do new deals with MSOs, satellite providers, etc, those people are restricting what can be offered. Which is why Hulu will have to go subscription for new content. The pricing for which, when added to an ISP bill will make Cable look cheap

]]> By: Derek http://wallstreetpit.com/13783-think-the-internet-will-replace-cable-read-this-first#comment-94755 Derek Thu, 14 Jan 2010 13:07:45 +0000 http://wallstreetpit.com/?p=13783#comment-94755 Mark, I may be missing something, but Mr. Rayburn's article addresses YouTube's backend technology issues but does not argue that these issues are related to the large user base or have any impact on the scalability of the service. Moreover, please explain how marginal bandwidth costs would be prohibitive, as you imply, in a model like Apple's rumored TV subscription service, where a viewer would buy a basket of network programs for a $3-$4 monthly fee. In such a model, if the revenue is split between the network and Apple, the network would see more, much more, in revenue/month/sub than its affiliates would see under even the richest retransmission consent agreements, and Apple keeps whatever is left in its $2 share after paying for the bandwidth. Is the marginal bandwidth cost of the bandwidth necessary to deliver all the network shows a customer watches in a month (assuming the shows are delivered efficiently, i.e., on-demand, maybe 10 GB) really more than $2? Incidentally, the majority of over-the-top services that are getting traction these days are on demand services rather than linear streaming services delivering a live programming feed of a particular channel. Is your analysis different in the former circumstance? Thanks for your thoughts. Mark,
I may be missing something, but Mr. Rayburn’s article addresses YouTube’s backend technology issues but does not argue that these issues are related to the large user base or have any impact on the scalability of the service.

Moreover, please explain how marginal bandwidth costs would be prohibitive, as you imply, in a model like Apple’s rumored TV subscription service, where a viewer would buy a basket of network programs for a $3-$4 monthly fee. In such a model, if the revenue is split between the network and Apple, the network would see more, much more, in revenue/month/sub than its affiliates would see under even the richest retransmission consent agreements, and Apple keeps whatever is left in its $2 share after paying for the bandwidth. Is the marginal bandwidth cost of the bandwidth necessary to deliver all the network shows a customer watches in a month (assuming the shows are delivered efficiently, i.e., on-demand, maybe 10 GB) really more than $2?

Incidentally, the majority of over-the-top services that are getting traction these days are on demand services rather than linear streaming services delivering a live programming feed of a particular channel. Is your analysis different in the former circumstance?

Thanks for your thoughts.

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