Multimedia
Blogs
Forum
Affordable HD
Whitepapers
Newsletters
Events
Advertisers
DCP Directory
MillimeterExchanging Emails with Mark Cuban
Aug 1, 2002 12:00 PM, By Cody Holt
 The host of The Mark Cuban Show in front of the camera. |
Mark Cuban must love email. On every one of his HDNet promotional spots, he asks viewers to email him. And the word is, he responds to nearly all of his emails — usually within 48 hours. It didn't take quite that long for him to get back to me. Maybe I made the questions too easy.
Video Systems: In July 2000 when you first approached Fox Sports about broadcasting Dallas Mavericks games in HD, had you given any prior thought to starting an HD network? How did the idea come about?
Mark Cuban: I wanted to understand different network and content providers' perspectives on HDTV, and that of consumers, and what the driving factors would be. Talking to Fox helped provide that perspective and [helped me] understand the opportunity, which in turn would help drive the decision to launch a network or not.
VS: Was a more modest, incremental approach ever considered?
MC: We wanted to be the first established HDTV network, so we had to do it right.
VS: Phil Garvin, general manager and COO of HDNet, says he was able to come up with a production model that took 80% of the cost out of traditional HD production. How important was it to approach HDNet from a blank-slate perspective?
MC: The idea was to do it in a way that was successful. We saw what Unity Motion had done in HD, and we saw what traditional startup networks did, and we wanted to take the best from them while realizing that this was much more like starting a cable network in 1980 than a digital network in 1999. Like the market back then, the driver for adoption was the differentiation from the traditional TV experience, and we have to be able to survive the early period until HD reaches critical mass.
VS: Phil says when he presents you with two options, you always take the risky option. He also says his senior engineer, Glen Valenta, is willing to take risks and try new things. Is this a mantra at HDNet, and if so, are you its source?
MC: No. I hate risks. I just want to do what is right for the business. When we decide to do something, it may be considered risky relative to conventional wisdom in the industry, but I pick that choice because I think it's the best path to success.
VS: In several ways, HDNet seems to be a mirror image of Broadcast.com. They both rely on using new technologies in very different ways. Are these early days of HDNet reminiscent of your early days with Broadcast.com?
MC: Very much so. Lots of naysayers, lots of people saying it's bad timing, lots of big companies not sure what to do in the space, lots of educating of advertisers, and a lot of technological change in the consumer space. In 1995, we knew that the 4K 386MHz PC would turn into an $800 1GHz PC fast enough that the PC and the 'Net would be mainstream. Today we know that analog TVs will go the way of the black-and-white TV over time, but that it will happen in an adoption curve that as it happens seems slow, but when we look back in 20 years will seem amazingly fast. That's just the way replacement technologies are adopted.
VS: With Broadcast.com, you caught lightning in a bottle. You were in early and out at the right time. Can you foresee any scenario where HDNet would create a similar financial windfall for you?
MC: Not really. There was a stock market boom then. We just rode that wave. In this case, the fact that the stock market is a bear market helps us tremendously. It makes capital very difficult to come by, and the market not only doesn't reward technology risks like it did in the late '90s, but it punishes companies that make investments in uncertainty. That leaves the door open for us to compete. If we were in a market like the days of the 'Net stock market boom, we would never be able to do this because every media company would put out press releases mentioning HD and their stocks would go up 20 points.
VS: In the technology game, how important is it to get in early?
MC: All you have to do is look at the early days of cable. Anyone who thinks that the networks on analog cable, the most precious real estate in the industry, got there because they are the best-programmed is sadly mistaken. They were there first. In this business, the best way to win is to get there first.
VS: What happens in 10 or 20 years when HD programming becomes commonplace? The cable networks that have become successful have done so by offering specialized programming. Your programming is specialized now because of its delivery format. But when ESPN begins broadcasting sports in HD, and CNN begins broadcasting news in HD, what will you do to remain viable?
 Mark Cuban’s eponymous sports talk show is recorded in both standard and high definition. The high-def version airs regularly on HDNet. |
MC: There will be three or four years when the audience is still not big enough for the majors to cost-justify broadcasting in HD. There is no way they are going to be able to send HDTV cameras to every bureau and every video news stringer that CNN uses. ESPN would have to invest in new trucks, new cameras, new studios, or vast upgrades. That's a big decision for Disney to make in this market at current stock prices.
Networks that license content from third parties will have to go back and get permission, if they don't have it, to convert content to HD, then they have to see if they can even convert that content. Any content can be upconverted, but not all content can be converted and look like HD content. Traditional networks showing anything but content created in HD or in film have some big issues to deal with. If a show used special effects, chances are they were mastered on tape, so all those special effects will have to be recreated. If a show was done on film, chances are it was mastered on tape, so the network will have to go back to the rights holder and find all the original masters and EDLs and remaster the show on film and then convert it to HD. Lots of shows don't even have all the info, or it's buried somewhere impossible to find.
Networks will find out very quickly that if they put up content that is upconverted and not full 1080i-level quality, that their product is going to look terrible next to ours and HD networks like Discovery and PBS. Think about the impact on their brand. We are going to have networks whose content not only looks dated, but it looks like crap and consumers are not going to be very forgiving. It would be like having an all black-and-white network today, but acting like you are trying to pass it off as current.
Finally, and this to me is the biggest issue for traditional, vertically integrated networks that have lots of content: If the country went 100% HD tomorrow, because so much of TV programming in their libraries is done or mastered on tape, those companies would have to take huge write-offs of those libraries for Wall Street.
I will explain what I mean. I own Rysher Entertainment. Two of the titles we own are LifeStyles of the Rich and Famous and Star Search. Both of these titles on the surface would be perfect for HDNet. Who wouldn't want to see Lifestyles in full, beautiful HD? With the success of American Idol, there has been lots of interest in bringing back Star Search. The problem is that these shows are on tape. They are worthless to HDNet. I can't use a single episode out of the hundreds and hundreds that we have. If HD were ubiquitous tomorrow and we were a public company, we would have to write down the value of those shows to next to nothing. That is the same problem that any public, vertically integrated media company has. The day they turn off analog spectrum, the media world is going to lose billions and billions off the value of their libraries, and they are going to have to spend billions to maintain the value of everything they have that is not in HD.
So that is going to buy us some time competitively.
VS: In your opinion, what is the single biggest obstacle preventing the widescale adoption of HD?
MC: Nothing is going to stop HDTV. The ball is already rolling down the hill. Pricepoints on digital TVs are dropping like a rock, and performance is increasing with every new model. So it's a foregone conclusion that analog will go away and HD will take over. No one is going to pay more for an analog TV than a digital TV, and when that pricepoint crossover time comes, as it has already come for big-screen TVs, manufacturers will stop making analog TVs so the question will become moot.
What will accelerate HDTV adoption are tuners being built into TVs, which I think will happen starting next Christmas, and for standards to be in place for connecting cable to HDTVs. If those standards are not in place sooner, it will slow things down, but it won't stop things.
VS: From a consumer standpoint, why is it so hard to get HD in homes?
MC: Where are you shopping? It's not hard at all. You walk into a store, you ask for an HD-compatible TV and a tuner to go with it, you take it home, and set it up. If you want more than over the air, you add cable or satellite, whichever meets your needs the best.
The question, though, reminds me of the ones I used to get in the 1980s when PCs were coming out. ‘Why is it so hard to buy a PC?’ Then in the '90s it was, ‘why is it so hard to get on the Internet?’ It's a reporter's question, not a question that reflects reality.
VS: Phil estimates that only 5% to 10% of the high-def sets — in excess of 2 million sets — in American homes are equipped to receive high-def signals. How frustrating is it from your standpoint that manufacturers of set-top boxes are lagging so far behind the apparent demand for their products?
MC: Not at all. It buys us time. If every set already had tuners, every major media company would already be in this space. This is a good thing, not a bad thing.
VS: This fall you plan to introduce three new HDNet channels and distribute them via cable providers and MSOs. Is this the next step in your plan to take HD to the masses?
MC: Yes. We will be wherever it's easiest for consumers to get us. We know that at this stage of the HD lifecycle, HD viewers are a customer that pays their bills, doesn't churn, and has their friends over to show off their sets. The perfect TV consumer. Both cable and DBS need to fight for that customer and we want to be the icing on the cake that helps either or both.
VS: Rumor has it that you read the AVS Forum (www.avs forum.com) copiously every day. What's the best insight you've gained from monitoring high-def user groups?
MC: I do, multiple times a day. They are my beta test group. When we screw up, we hear about it. You tend to get every perspective, which allows us to know what early adopters' perceptions of us are. You also get some newbies, which give us some focus group-like research to get their perspective and how their absorption of HD in their homes works.
They also allow me to throw up some trial balloons and see how they respond.
VS: How long are you willing to operate HDNet before it starts turning a profit?
MC: As long as it takes.
VS: Why are you funding HDNet, and why have you become such a vocal proponent of HD? What's in it for Mark Cuban?
MC: Lots of fun and money in the long run.
feedback
To comment on this article, email the Video Systems editorial staff at vsfeedback@primediabusiness.com.
