I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google for free. Why ? Because they are finally getting BILLIONS of dollars in retransmission fees from their distributors. This is new money. It is found money. It is money they are fighting for. Just ask Fox and Cablevision what they think of each other this week.
The idea that they would take and fight for money from their distributors, who generally are the same ISPs that Google TV delivers content over, and then offer the exact same shows for free through Google TV, or any aggregator that expects that content for free is probably one of the dumbest concepts ever.
Now if Google were to go to those networks and offer them money per month for every buyer of a Google enabled device or TV, that would be different. Then they would be a tv provider competing with the rest and they should take their money. Think Google will ever do that ? I don’t.
So giving the same content they not only charge their distributors for, but also charge their local affiliates for to Google for nothing or for a share of revenue ? STUPID.
If Google sticks to their guns of not paying up front for content like Netflix does, they will have handed Netflix the entire streaming universe on a platter.
Did anyone else see the report that Netflix streaming consumes 20pct of download throughput during weekday primetime hours ?
If this is true. Its one more reason to think that Netflix has won the streaming wars and those broadcast networks would be moronic to give their content online away for free. Why ?
First of all, do you know the difference between Netflix and Google when it comes to content ? Netflix pays up front and offers minimum guarantees. Google and everyone else for that matter, pays a commission based on ad sales. (which works wonderfully on Youtube for them)
So riddle me this batman. Netflix is on Google TV , correct ? Given that Netflix pays and Google TV doesn’t, why wouldn’t/shouldn’t the broadcast networks offer all of their shows to Netflix as a way to reach Google TV users, knowing that they will get paid for their content. Paid HUNDREDS OF MILLIONS OR MORE for their content.
All you internet pundits want the broadcast networks to give the content away for free. THAT IS STUPID. Get Netflix to pay you on a per subscriber basis on a par with what your other TV providers pay you. Netflix becomes a competitive TV provider. BRILLIANT. You get paid. You reach Google TV users and non Google TV users.
Of course you basically cede to Netflix control of the streaming content world. You give their streaming only subscriptions a unique value beyond old shows and movies. Goodbye Hulu as well.
Of course once they get the broadcast nets, how long until they add the cable nets like ESPN, Disney, etc., etc. ?
Back to the Netflix using 20pct of bandwidth. Now that they have gotten there, it is going to be easier for Netflix than anyone else to grow their bandwidth usage. They can add streaming subscribers at a controlled level and it could work. Growing their usage as a percentage of total bandwidth consumption quickly becomes a trojan horse in the streaming wars. They are consuming so much bandwidth, they literally are blocking out the ability of anyone to compete with them.
If Netflix gets to 25pct do you think Google is going to be able to also get to 25pct during primetime and all of the sudden 50pct of the internet’s bandwidth during primetime is allocated to streaming tv originated shows, movies and other video ? Of course not. And that’s before consideration for Youtube. How much bandwidth in primetime does and will Youtube use ? After you combine Netflix and their growth to Youtube and its growth, what kind of internet bandwidth is going to be left for anyone else for streaming TV to millions ?
There will be big problems and lots of quality and delivery issues long before we get close to those percentages. Leaving Netflix in a phenomenal position. They get to adapt to a declining available bandwidth environment with an existing product , revenue and subscriber base. There is no such thing as equal access when you are blocking up 25pct of the lanes on the highway 24×7. The others can’t even get on the ramp.
Their competitors have to figure out how not only how to overcome the technical hurdles of reduced available bandwidth, but also a business model since no one will want to give content away for free when Netflix can pay them.
Netflix is smart as shit.
Netflix is also great for traditional TV providers. TV works. TV works for any number of subscribers or viewers. 100pct of the digital bandwidth that TV uses is designed, managed and operated purely for the distribution of TV and complementary features. It will work.
Netflix should end up as the only “TV” provider that truly works on the internet, Which means that content providers like the broadcast and cable networks can be paid by Netflix on a per sub basis for their subs who want to subscribe via the net, and from traditional tv providers for those who want buffer free, (relatively) full quality TV the old fashioned way.
Oh, and one more thing. Expect your internet bills to go way way up as ISPs make it clear that all this video over the internet is going to require billions in upgrades. The irony is that while you may not like paying for cable channels you don’t watch. You will end up paying for cable channels on the internet that you don’t watch as well. In this case you will be paying via higher net bills for the extra bandwidth required to stream cable channels that your neighbors like to watch
What do you bet Google will make an offer to buy Netflix?
Comment by glenwoodfin -
Pingback: Marc Cuban’s Eye of Sauron — Lucas Gonze’s blog
Pingback: Mark Cuban on Disrupting Digital Businesses
Pingback: Will Google TV Have Access to Network TV Shows?
Pingback: Why the other studios should be thanking Warner Bros. | The Content Beast
Pingback: Why Broadcast TV Networks Are Wrong to Block Google TV
Pingback: Facebook-like Social Games to Rule Google TV, Apple TV: Cuban
Pingback: Former Google Employee: Flying Easier Than Using Sony Google TV Remote | Rodney Payne
Pingback: Free Video Content and Cutting the Cord | An Ideas Book
Pingback: Vid Biz: DVD Kiosk Boom, Streaming-Only Netflix, Ivi Struggle: Video «
I don’t think netflix is built right to pay “enough” for all the tv content. Their fees would definitely need to go way up to be able to beat out the cable companies on how much they pay the networks and there are still millions of people in the US that are nowhere near streming online content which gives the cable companies plenty of time and money to figure it out.
I am pretty sure you can currently login through the comcast website if you are a current subscriber and watch all they have to offer online. This is not something they probably advertise much since it costs them extra money but I would venture to say that we will see directv/comcast/timewarner/uverse all build online portals where you can watch and record everything through a browser on your tv if you want. All Google TV is doing is forcing their hand faster then they want. Google knew they were going to be blocked. Anyone who thinks they would spend this much money on investing in GoogleTV without doing their due dillegence is crazy. The game Google needs to win is getting the cable/satellite companies to build apps on Android so they can control the experience. The key will be figuring out a way to verify that you are a directv subscriber so you can have a much better experience watching tv through googletv instead of through boring directv.
Comment by sportstechnow -
Pingback: Mark Cuban on Google TV: Netflix could solve Google's woes | GTVHub.com
Pingback: Netflix Offering Streaming-Only Subscription Option In U.S. | Network TV Next On Agenda? « The Levisa Lazer
Pingback: BuzzFeed President: Flying Easier Than Using Sony Google TV Remote | Rodney Payne
Pingback: » A vision of the future of television
Pingback: Notes on the Future of TV « excapite
From a strictly consumer point of view, I think it incredibly audacious for the networks to charge customers for content that has already been paid for by corporate sponsors. Basically, they are asking consumers to pay to be marketed to. This is the largest complaint of the Hulu Plus service: “if I (as the consumer) am paying ten bucks a month for this service, why should I be subject to advertising?”
Comment by crashmodem -
Pingback: How Google TV Could Hand Netflix the Entire Streaming Universe | Mark Cuban | Voices | AllThingsD
Pingback: links for 2010-10-24 « James Holcomb
“It will never work”. Isnt the point of your article that it’s working for Netflix? Why then can’t HDnet or CBS follow suit?
“Because on TV you compete with 300 channels. On the net, you compete with millions.”
I agree, for millions, it’s not going to pan out. But there is room for a top 300. For the top 300, it seems like they might find a model in Netflix’s solution of being freely accessible anywhere and everywhere, and then charging people to get in. If you goto http://www.netflix.com/ right now, I see they are luring in people with a month free subscription. Why wouldn’t you do this HDnet? Wouldnt you say HDnet has a good chance at the top 300 online? For each being a niche, is there anything Netflix has that you dont?
“They have the money to spend on marketing.” Good point. Marketing would make a world of difference. So can’t HDnet or ABC spend some money marketing? Why doesnt that translate? Netflix has ads all over the place. It seems like their high cost per customer is worth it for all the $ they spend on marketing.
“Just because its a browser on a device, doesnt mean the content owner wants it to be viewed on that device”. Kinda like the newspapers didnt want their news to be read on anything other than the paper? Or how the music industry didnt want you to go online to buy? Or because they wanted to sell full albums and not individual songs? I think we both agree that now is one thing, the networks are making serious bank from cable and will want that to last as long as possible, but at some point, it seems like they will need to make the switch because the audience is making the switch. It’s rolling pretty quickly now, so they’ll need to figure out quickly how to lower costs and transition online. Seems like Netflix is proving a model other big networks could follow. Even if the cable co’s increase internet service costs, that will help them, but not the studio networks.
Comment by andrewbaron -
Pingback: Nets would be ’stupid’ to give content to Google TV - Lost Remote
Pingback: Netflix Offering Streaming-Only Subscription Option In U.S. | Network TV Next On Agenda?
Pingback: Webomatica
Pingback: How Google TV Could Hand Netflix the entire streaming universe (Markcuban/blog maverick) | Business Continuity Jobs
Pingback: Google TV is Out! « TechnoBuzz
“I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google for free. ”
You are misinformed. Google isn’t asked to be given anything. Google doesn’t want to be given anything.
Google has made a browser. Just like Apple, Microsoft has made browsers, just like there are Firefox and Opera browsers.
The greedy networks just choose to block THIS browser.
Google has quite sensibly said that “owners” of “content” are free to do as they please.
Probably because Google knows that people will find ways around it – either by bypassing the blocks, or watching other sources – source which are currently small, but who will grow larger as the old dinosaurs die out.
The stupid thing here is that the networks chose the way which will lead them out of business the fastest. But then that is why companies usually die, they become too old to adapt to market changes.
“All you internet pundits want the broadcast networks to give the content away for free. ”
Not all, some of us just want them to charge decent prices in stead of the sick twisted greed models of old.
“Of course you basically cede to Netflix control of the streaming content world. ”
Ah you jingoist you. Netflix is a little company who only services The United States, the rest of the world can’t use them.
Once Google TV hits the rest of the world, the rest of the world will set up an ever growing number of sites which will stream all kinds of stuff, including pirated material from the US.
“Oh, and one more thing. Expect your internet bills to go way way up as ISPs make it clear that all this video over the internet is going to require billions in upgrades.”
Yeah, the greedy people will continue overcharging for a service which they could providing 2000% cheaper.
Unless of course someone actually elects politicians with a clue.
Of course internet so far is speedier and cheaper in Europe so they may have to lead the way.
Comment by bruger1 -
I have been reading your blog for many years and have found almost everything you have written about to be creative, spirited and plausible, especially when it comes to business and just living in general, but with regards to your writings on internet TV, I have not ever once found your ideas to be plausible.
But where I give up evertime with you on this topic is when you pull out the “All you internet pundits want the broadcast networks to give the content away for free” line. I wish you would please stop with this line of argument. No one expects the content for free. I’m not sure who you are hanging around but if they are telling you they want it for free, tell ’em why once, but don’t spend your life worrying about this argument because it ruins every article you write on the internet tv subject. You end up arguing why it cant be for free. Of course it cant. Lets move on.
In this particular case, I think you, like the networks, are in a perpetual state of not being able to figure out what to do. You are just noticing here how Netflix is working, and you think that in order to distribute to Google TV, it must mean one needs to distribute for free.
But Google TV is actually offering you the chance to do something awesome with HDnet, for example, just like they are offering something awesome for Netflix. And that is to make a lot money. They are offering to get your content in more people’s homes, homes that do not already have it, and they are not even asking for a cut. Pretty darn cool. Google is happy to go along for the ride because they want to be there when people are ready to search.
I know what you are thinking. How are you going to make money from the people on Google TV who arrive at your website? Charge ’em!
Why not put some innovation behind HDnet after all of these years and show everyone how it’s done by making your content free and available to get to, via the Google TV, Apple TV, etc, by way of the browser and the free and open web, and then once they arrive at your destination website, make ’em pay! You can charge your fee and get that money direct from the consumer without cutting in any middle people.
Google TV and Apple TV are handing you the technology and they are handing you the audience, for free. They are allowing people to get to you on their TV, so you can score the $ from there. No one is expecting to get ABC or NBC shows for free. If they want to get all of ABC’s shows on the internet, they should just pay a monthly subscription to get it there. Or per show. Or whatever.
Its so darn simple Mark, just do what yall do down there at the State Fair of Texas and charge an entry fee.
p.s. Im allowed to say that ’cause I grew up in Dallas. 😉 Cheers.
From MC> Trust me, it wouldnt work. Why ? Because on TV you compete with 300 channels . On the net, you compete with millions. That is why record labels, those old dinosaurs continue to dominate the top 100 and top marketshare charts. They have the money to spend on marketing. THe same with movies. They HAVE to spend 10s of millions of dollars in order to get people into the theaters. Its why 99pct of Youtube videos have less than 10 views. Its expensive to stand out.
Look at how much Netflix spends to acquire a customer, I think its about 23 dollars. PER sub, and thats Netflix.
TV networks put their content on the web to reach office users and people who cant get to their TVs and to people who miss a show and dont have DVRs. They arent putting it out there to reach TVs. Just because its a browser on a device, doesnt mean the content owner wants it to be viewed on that device
Comment by andrewbaron -
I’d like to add that YouTube is a platform, unlike Netflix. While Netflix provides a really compelling on-demand service, they aren’t opening their service to developers, thereby missing out on the potential for market share growth due to entrepreneurial innovation.
To see what I mean, check out the way http://localshow.tv is using one of YouTube’s APIs to deliver very specific, locally-targeted content. It would be hard to deliver this kind of service without giving developers the freedom to tap into an existing database of content.
I think the bandwidth angle is really important, but there might be really different ways to use video in the future that Netflix won’t be well-positioned to take advantage of.
Comment by iandennismiller -
This is a carbon copy of you explaining Broadcast.com paying for MLB rights 12 years ago.
Eventually, they’ll go direct, but not yet.
Comment by Morgan Warstler -
Pingback: Google TV is Limping Without Studio’s Support — jungleG
Pingback: How Google TV Could Hand Netflix the entire streaming universe (Markcuban/blog maverick) | Stereo Speakers Reviews
One more thing.
Cutting the Cable in the US, is a problem – and Google TV, Samsung, Sony, Boxee, Roku, IPTV, and the rest of the OTT players vying for market share are their worst nightmare.
http://www.appmarket.tv/search/tags/cutting-the-cord.html
From MC> Unless the names you mention are willing to pay upfront for content they aren’t even going to be a blip on the screen. Their browsers will be blocked and they will only get access to content that has already been for the most part monetized67u8
Comment by Appmarket.tv -
Netflix does not control its own destiny. They are a digital digital middleman. They must pay for content. And they are dependent on the infrastructure of their primary distribution competitors, cable MSO’s and telcos. If the large integrated media companies ever decide that streaming video services like Netflix are causing people to drop pay-TV subscriptions, they may choose to pull back their content. Yes, Netflix can write a check. But, the distributors like Comcast and DirecTV pay tens of billions of dollars in affiliate fees. If I ran Disney, I would do everything possible to protect those payments. I sure wouldn’t want that system to be overturned by OTT. Jeff Bewkes gets this very simple concept. I suspect other content chiefs will get religion as well.
The sweet spot for Netflix is that they have a nice subscription OTT service that enables media companies to monetize their content, especially catalog titles, but does not compel people to cut pay-TV (which would force media companies to pull back at least some of their content). Media companies that trade pennies for dollars are not long for this world. Also, in addition to affiliate fees, media companies will watch how Netflix affects their syndication revenues (possible compression of 2nd run syndication values) and their DVD sales. But, even if Netflix can get into that sweet spot — a service that compliments pay-TV, and not a substitute for it — that still doesn’t alleviate two more strategic issues: i) their dependence on content providers/studios (which can and are raising prices) and ii) for digital distribution of entertainment, there really are no barriers-to-entry. Yes, a competitor has to pay for that content — and Netflix already has existing revenues to put into content acquisition. But, that’s a particularly dangerous way to build a barrier when you consider that companies like Comcast already pay billions to deliver basically the same content. Those pockets are very, very deep.
From MC> Well said. I just think that Netflix is far enough along that they will be able to pay enough to add content as a complementary to TV service. But I cant disagree with anything you wrote
Comment by geoffreyka -
From MC: Richard, whatever you do, don’t go to work for a cable network. You will put them out of business. You ignore all the true numbers of the business. What you suggest sounds nice to netizens, but it makes zero economic sense.
Richard: Perhaps what I wrote makes zero economic sense to you Mark – in your eyes. Whilst I have been ignoring the numbers in my retort – it’s because they will be in different hands in ten years.
I am more than familiar with the money involved – 60 billion in the USA and 180 billion globally that brands pump into old TV models vis a vis advertising budgets. There is already more money being spent online in the UK than TV. And budgets are moving away from linear broadcast TV to online globally. All major media that have significant broadcast portolios on the stock market are contracting – at least that’s what Shelly Palmer told me – which is not good for investors.
But the reality is – the industry is in for disruption – one way or another. It will be as harsh or harsher than what has happened to the music industry in my opinion… where labels are F**cked and no one knows who is going to finance the new A-list acts and all the money being made is out of Live and Merchandising.
Sure news, live and special events will always allow for broadcaster to shove 30 seconds of propaganda in the face of consumers every ten minutes. But with the bulk of recorded entertainment destined for the cloud – brands are going to have to find other ways to get my attention as I will scroll past the pre-rolls and/or delete the commercials.
As for working for Cable Network – well, not a chance… you are probably right. But a global entertainment and media company has hired us to consult… it seems our perspective has wheels – if only to create scenarios that their Baby Boomer, old-school leaders don’t envision or can’t swallow.
There are many ways to monetize the future of TV, but it won’t be the way they do it today. Transmedia is an excellent example. Social TV, clickable video, Geo targeting, contextual and interactive advertising are others.
Comment by Appmarket.tv -
@konop1 – Google TV is bundled in new Sony and LG TV’s and will likely do the same with Samsung in the near future.
Or you can buy an STB from Logitech.
The point is – the future of TV is Connected and by 2014 90 per cent of all TVs sold will be Internet enabled.
Comment by Appmarket.tv -
I think the issues we are dealing with are much larger than just what company will win. (Or should I say be the largest provider in the next few years). In the pre-internet world a content owner really could control distribution channels and windows of delivery. I believe the business model where content owners “push” content choices to a licensee’s walled garden of customers is at its peak or has already peaked. I believe we are entering a “pull” model where everything is available but the price you pay for it will be determined by how soon you get it, the amount of advertising included, how long you have access to it (buy vs. rent), and the bandwidth being used. This may seem overly simplistic but since almost everything is already available for free through less savory sources, I don’t see why content owners would not milk their content for all it is worth before it becomes available through a source that is making it available were they don’t get paid at all (pirates). I have owned video stores for twenty years. We live in a business model with reasonable up-fronts (about 30% of projected gross revenue), were content distribution is highly competitive and the content itself is a perishable asset that decreases in value over time. Because Most Favored Nations deals and Huge up-fronts are restricting the flow of content through so many potential distribution mediums right now we are not yet seeing the real powered of what a pull model can do for content owners. What the Internet is best at is highly customized nitch distribution. (I may not be able to beat Netflix on a world stage but I can beat the crap out of them in my neighborhood.) Barriers to entry like big upfronts, and exclusive that last until the contents only value is to a pirate, are inefficient business rules that need to change if TV and Movies don’t want to end up like Music where there are a few “legal” suppliers and an industry in double digit decline.
Comment by vrieling -
If what MC says is true, this is basically the death of GoogleTV. Why would I plug another box to my tv when I already have a PS3 or similar device that runs netflix?
Comment by konop1 -
Just read Richards post above, he and I are making the same argument. I agree with him completely.
Comment by mmartinjr78 -
Thanks for the response Mark. Apologies for the length but I have a long follow up if you have the time to read it. I look forward to your thoughts. Thanks.
“If Google allows apps that enable subscription offerings, then you are correct.”
They do, Netflix and Amazon Video On Demand do exactly this. You go to their sites, sign up for a subscription, download/use the Google TV (Andoid) App and the content is streamed/bought to the consumer. Google does not host the content. Google merely hosts the app and provides a marketplace.
“Its just not a good one. Why ? Because if a broadcast or cable network where to offer their content ala carte, then because of MFNs with cable/telco/satellite tv providers, they most likely will have to offer their content to them in the same way. Again, I dont think they are that stupid. Maybe they are. Maybe they would rather sell through Google TV on consignment than get a guaranteed per sub amount from traditional TV providers”
I respectfully disagree and think our disagreement relates to an understanding of Google Tv and more importantly Google Apps/Android Marketplace/Googles business model as a whole. The key here is that Google is not hosting/providing content, I guess maybe they could try to work out agreements with the content providers and turn themselves into a middle man (through YouTube maybe?), but I suspect that is not what Google is going for and at this point in time I have not heard that Google is attempting a Netflix style subscription service and for good reason.
Google’s business plan is to provide a platform and an app marketplace. The two relate to each other as the platform is what run’s the apps. If the platform pervades the consumer market like Android is currently doing for mobile phones then apps through the Google marketplace will be the main place you go to find content providers. Google will get their piece of the pie through two revenue streams, they take a percentage of the cost of the App (and that’s it, no piece of the content revenue the app provides) when it is bought from their market place, when apps are free they are usually subsidized through ad revenue (ie. Google ads). There is also a $25 fee to join the Android Marketplace.
In this model the content provider (NBC, ABC, Fox) assume the costs of hosting their content but realize 100% of the per subscription/purchase price revenue from their content. This is a far better business model than taking a fraction of the per subscription revenue from Cable/Satellite providers (or your suggestion of using Netflix as the middle man). Not to mention they can do all of this without changing their agreements with Cable/Satellite providers (since there are no exclusivity agreements that I am aware of (ie. Iphone on at&t or certain channels only being provided by a single cable/satellite provider), over time content consumers will move from cable plans to data plans (data plans price will increase to support the weight of the data, but by this time they will be competing with 4G cell phone data providers (100 mb/s)) and the content providers will realize a larger percentage of their actual content revenue.
Just to re-stress, this would not be a consignment situation, ABC, NBC etc would not provide their content to Google. They would provide their content through their own app which is bought in the Google Marketplace with Google only taking a piece of the App revenue, not the content revenue.
This also allows Google to maximize other revenue streams because they provide various other cloud based services (Google Apps/Google Docs). Google TV/Android for mobile phone provide more exposure to Google services, people start using them, get used to them and then pay a service fee. Unlike Microsoft’s business model where you buy new licenses when the product updates (Windows Vista to Windows 7 for example) Google continually provides updates but offers a premium service fee. So you always have up to date software. Google provides just enough for free to get you in, then when you can’t live without it, you upgrade to premium. That said, you always have the best product and aren’t stuck using Windows XP when Windows 7 exists because you don’t have the capital to purchase the upgraded software (obviously I’m referring to an enterprise situation here).
Not to mention Google is developing Chrome OS whose sole purpose is to run Web Apps. The future isn’t buying a license and physical copy of software. The future is web apps paid for through service fees or ads. Unlike Windows/Mac OS, Google’s OS was/is built from the ground up with this in mind, so as more and more apps become web based (consider applications like SAP, PeopleSoft etc, they are all moving to strictly web versions, Windows has even started to do this by creating Windows Live, they see the writing on the wall as well), Google will be uniquely placed to handle these applications while Windows/Mac OS will have to bolt on enhancements to their current OS’s which is never a good idea or start things over and build from the ground up in order to have an OS that runs as efficient as Chrome OS will. Just look at Google Chrome browser, it is far and away the most efficient browser because it was built for this purpose (unlike IE for example).
I’ll finish with this. I work in Finance for a Healthcare System, I am not a Google employee nor do I own stock in Google. I guess I just see the logic in and agree with the direction they are going. With Google never evaluate an individual product; they can take a hit financially on certain products as long as the product adds to the overall strategy. Think of Google TV/Android/Chrome OS as one in the same thing, they are all ways for Google to get you to their services/see their adds.
From MC> They allow subscriptions to series. Not linear or aggregate subscriptions which is what is needed
Comment by mmartinjr78 -
QUOTE :”Oh, and one more thing. Expect your internet bills to go way way up as ISPs make it clear that all this video over the internet is going to require billions in upgrades.”
i have seen this idea repeated many many times by Mark.
Reed Hastings is on record saying that it costs him a nickel to deliver the movie over the internet.
http://www.siliconvalley.com/news/ci_16264945?nclick_check=1
Assume that the consumer ISP is a mirror of netflix , so their cost is a nickel & a nickel for the middlemen connecting Netflix to the consumer ISP.
So the customer’s cost to the ISP is 10 cents for an average 90 minute movie.
Nielsen says an American household spends 161 hours ( 153 + 8 ) watching TV.
http://blog.nielsen.com/nielsenwire/online_mobile/americans-watching-more-tv-than-ever/
So the Data costs are 161*0.1*(2/3) = $10.73 ( 10 cents for 90 mins )
The rest is what goes to overhead & profit , i leave to the people reading to arrive at their own numbers for each of those line items.
“The Billions in upgrades” will probably be spent on Exec bonuses or buy out internet startups for billions
Also read this link on netflix streaming costs ( author not associated with netflix , but reed hastings confirms his analysis not directly though )
http://blog.streamingmedia.com/the_business_of_online_vi/2009/03/estimates-on-what-it-costs-netflixs-to-stream-movies.html
Comment by carldupree -
I’ve yet to play with a Google TV device, so I may be ignorant here, but: Isn’t Google TV essentially just a video-optimized, remote-control-friendly web browser? When you access content through Google TV, isn’t it just directing you to content that’s already being provided on the networks’ own websites (or hulu, etc.)?
A couple of years ago, I bought a little connector that lets me hook up my MacBook to my television. Should Apple or Mozilla be forced to pay the networks because I am viewing their content via a MacBook or Firefox browser?
I follow the argument about why the networks would be wise to not give away their content for free anywhere, but I don’t see why they should make it available free on certain screens or browsers but not on others. (I’d actually love to see the networks do away with their clunky, ad-supported video sites if it meant they were going to make everything available in a timely manner on Netflix.)
From MC> Dont be surprised if they pull content from their websites or define limits on devices to PCs. Or maybe even limit the time of day you can watch. Remember, websites have a legacy of being available to PCs. Availability to TVs through devices or the TVs themselves is new. We are entering the period where we will see change in how video is offered
Comment by dhaugen612 -
I think this post misses the point of Google TV. It’s a platform based on Android and the goal is provide a TV version of Android for mobile phones. Vendors would have an open source platform they could build off of. Google TV can be picked up by any TV vendor and added to any TV device. It would allow TV makers to concentrate on what they do best ie. build TV’s, while Google TV can be the platform the TV maker develops for (like Samsung, Motorola and HTC do for mobile phones). Hypothetically cable companies could use it for their set top boxes, it’s a better user interface, provides internet access through the chrome browser and allows for the usage of developed web apps. That said Google TV allows users to go around the cable company content packages and just use a data plan to get content, so I highly doubt they would add Google TV to their set top boxes. There is an argument to be made that by using Google TV and providing a better user interface the cable companies might be able to retain customers and keep them from moving to the Google TV and Apple TV devices that are being developed because they already have paying customers that are not technically savvy and are used to dealing with a cable company to get their TV content.
The other point that is missed by this blog post is like your mobile phone, apps can be added to Google TV. Possible apps could include CBS, NBC, Fox, Showtime, etc . Mark asks why wouldn’t the networks go to Netflix? Easy, each network can become their own Netflix by developing streaming apps for the Google TV platform. They can each own their own pay for service apps or sell digital copies through their app. Mark is stuck on the idea that Google TV wants free TV from the networks, or that it wants to be a provider like Netflix. If that were the case Netflix wouldn’t have an app on the platform. Yet Netflix does have an app on Google TV and that’s because Google doesn’t want to be a provider, they are showing the TV companies that they can build apps like Netflix, place them in the android marketplace and collect a monthly fee. Google doesn’t care if TV companies provide their content for free or develop an app. Google just wants to be the platform these companies develop for. If anything Google TV could be what kills Netflix. Why would movie studios go through Netflix when they could develop their own app and either sell digital copies over the internet or develop their own monthly service programs for content they own. Each company could control their content delivery to the customer. Google TV is providing a way to eliminate the middle man.
Without even realizing it, Mark actually makes the argument for why Google TV should hypothetically work.
From MC> If Google allows apps that enable subscription offerings, then you are correct. There is an opportunity there for content providers. Its just not a good one. Why ? Because if a broadcast or cable network where to offer their content ala carte, then because of MFNs with cable/telco/satellite tv providers, they most likely will have to offer their content to them in the same way. Again, I dont think they are that stupid. Maybe they are. Maybe they would rather sell through Google TV on consignment than get a guaranteed per sub amount from traditional TV providers. But i doubt it
Comment by mmartinjr78 -
So, it finally comes to light, Mark. You’re a TV guy 😉
Your analysis is sound, however, I don’t think you’ve taken into consideration the various laws in place, upto and including the DMCA.
Furthermore, the networks’ content has already been pretty much paid for in its entirety by the time it gets to Google TV. It would seem that your argument stems from the networks leaving money on the table.
I believe all these questions will be answered by the FCC, if they haven’t been already. You once stated that YouTube should collapse under its own weight once the copyright infringement issues have been taken care of, e.g. when Google bought YouTube. I’m thinking that maybe you might’ve been wrong on this one.
As a content creator, when should I expect to get paid? I’m willing to be paid up front to create ‘new’ content. I’ll let everyone else fight for the money left on the table. If it is your contention that they can’t pay me because they’ve given my content away ‘free’, then we might have to further discuss this issue.
I anxiously await your response.
Comment by Matches Malone -
If I may Mark play Devil’s Advocate on this – with another point of view.
Mark: I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google for free. Why ? Because they are finally getting BILLIONS of dollars in retransmission fees from their distributors. This is new money. It is found money. It is money they are fighting for. Just ask Fox and Cablevision what they think of each other this week.
Richard: They are not giving their content to Google for free, they are blocking monetized and free programming that they make available on the web from appearing on Google TV.
Mark: The idea that they would take and fight for money from their distributors, who generally are the same ISPs that Google TV delivers content over, and then offer the exact same shows for free through Google TV, or any aggregator that expects that content for free is probably one of the dumbest concepts ever.
Richard: They are not offering anything for free – it’s their choice to monetize, or not, the content they deliver on the web. Google is merely a platform for your TV to access the web.
Mark: Now if Google were to go to those networks and offer them money per month for every buyer of a Google enabled device or TV, that would be different. Then they would be a tv provider competing with the rest and they should take their money. Think Google will ever do that ? I don’t.
Richard: Why should Google offer anything? It’s the choice of content providers and distribution channels to monetize their inventory on the web. Not for Google to give them money for nothing.
Mark: So giving the same content they not only charge their distributors for, but also charge their local affiliates for to Google for nothing or for a share of revenue ? STUPID.
Richard: Once again, what the content providers and distribution channels choose to charge on their inventory available on Internet Protocol (IP) is their own choice. Google TV is merely a gateway to the World Wide Web – they are not dumbing down the web for TV (like app-driven architecture such as CE manufactures (Samsung, Philips, Sharp, Panasonic, etc), and others (such as Boxee, Yahoo, Roku etc) are offering, they are empowering consumers to explore and make use of the Internet on the big screen in their living room… in it’s full glory.
Mark: If Google sticks to their guns of not paying up front for content like Netflix does, they will have handed Netflix the entire streaming universe on a platter.
Richard: Google is not in the game of paying for content for Google TV, they are a facilitator and access point for big screens to access the web. If anything Google might start buying up content providers, distribution channels and that side of the industry – much like they are already going to ‘own’ the future of distribution via their aggressive moves in the Fiber Optic space. http://www.google.com/appserve/fiberrfi/ – They can certainly afford it.
Mark: Did anyone else see the report that Netflix streaming consumes 20pct of download throughput during weekday primetime hours ?
If this is true. Its one more reason to think that Netflix has won the streaming wars and those broadcast networks would be moronic to give their content online away for free. Why ?
Richard: Then the networks need to stop offering their content for free on the internet and monetize it. Then they will make money when it’s viewed on Google TV.
Mark: First of all, do you know the difference between Netflix and Google when it comes to content ? Netflix pays up front and offers minimum guarantees. Google and everyone else for that matter, pays a commission based on ad sales. (which works wonderfully on Youtube for them)
Richard: The big difference is, Google is not really in the business of doing audio-visiual content deals other than Youtube. And that’s web based… and soon to be TV accessible via Google TV.
Mark: So riddle me this batman. Netflix is on Google TV , correct ? Given that Netflix pays and Google TV doesn’t, why wouldn’t/shouldn’t the broadcast networks offer all of their shows to Netflix as a way to reach Google TV users, knowing that they will get paid for their content. Paid HUNDREDS OF MILLIONS OR MORE for their content.
Richard: Exactly. What’s available on the Web will become available on TV. Not to mention that Netflix has deals in place with most if not all the major CE manufacturer platforms as well as the IPTV space making their inventory available on Samsung Apps, LG, Panasonic, Boxxee, Roku, etc, etc, etc. But in this case, Netflix, and by proxy, the content providers have TO PAY via rev share for the opportunity to get eyeballs on TV via new distribution channels.
Mark: All you internet pundits want the broadcast networks to give the content away for free. THAT IS STUPID. Get Netflix to pay you on a per subscriber basis on a par with what your other TV providers pay you. Netflix becomes a competitive TV provider. BRILLIANT. You get paid. You reach Google TV users and non Google TV users.
Richard: Nobody is giving anything away for free.
Mark: Of course you basically cede to Netflix control of the streaming content world. You give their streaming only subscriptions a unique value beyond old shows and movies. Goodbye Hulu as well.
Richard: And what? Most studios and networks are frothing at the mouth at the pricing models of Apple (99 cents) and under ten bucks a month unlimited by Netflix… it’s doing a deal with the devil for them. That’s crap money.
Mark: Of course once they get the broadcast nets, how long until they add the cable nets like ESPN, Disney, etc., etc. ?
Back to the Netflix using 20pct of bandwidth. Now that they have gotten there, it is going to be easier for Netflix than anyone else to grow their bandwidth usage. They can add streaming subscribers at a controlled level and it could work. Growing their usage as a percentage of total bandwidth consumption quickly becomes a trojan horse in the streaming wars. They are consuming so much bandwidth, they literally are blocking out the ability of anyone to compete with them.
Richard: It’s not just Netflix and it will be easy to grow their bandwidth usage – sure – in the future via Google owned Fiber Optics. Note, at Samsung Developer Day in London last week I reported. http://www.appmarket.tv/opinion/742-samsung-woos-tv-app-developers-at-london-event-for-connected-tv-smart-tv.htm
“In 2014, 90 per cent of all TVs shipped will be internet connected,” added Letts.
Blinkbox’s co-founder and COO Adrian Letts pulled out some interesting stats while pitching his wares at the event, noting with particular interest that TV is the fastest growing sector in the IP market and is expected to overtake mobile and the PC by 2013 in terms of overall bandwidth use, or data consumption. A five-fold growth in three short years is expected.
It’s also connected TVs in general.
Mark: If Netflix gets to 25pct do you think Google is going to be able to also get to 25pct during primetime and all of the sudden 50pct of the internet’s bandwidth during primetime is allocated to streaming tv originated shows, movies and other video ? Of course not. And that’s before consideration for Youtube. How much bandwidth in primetime does and will Youtube use ? After you combine Netflix and their growth to Youtube and its growth, what kind of internet bandwidth is going to be left for anyone else for streaming TV to millions?
Richard: Bandwidth is an issue. For sure. It will take time to solve it. But again – I reiterate, it’s not just Netflix. It’s all kinds of apps that stream videos on TV. It’s all kinds of websites that stream video on the Web.
Mark: There will be big problems and lots of quality and delivery issues long before we get close to those percentages. Leaving Netflix in a phenomenal position. They get to adapt to a declining available bandwidth environment with an existing product , revenue and subscriber base. There is no such thing as equal access when you are blocking up 25pct of the lanes on the highway 24—7. The others can’t even get on the ramp.
Richard: They are not the only players on the block – globally for sure. In the US, there’s certainly competition on the web. And other models like Hulu as direct competitors.
Mark: Their competitors have to figure out how not only how to overcome the technical hurdles of reduced available bandwidth, but also a business model since no one will want to give content away for free when Netflix can pay them. Netflix is smart as shit.
Richard: I agree they are smart as shit. But again, they won’t be consuming all that bandwidth themselves. Youtube will also consume plenty via their apps on Samsung, LG, Panasonic, Toshiba, Sharp, Philips, Loewe, Ericsson and every other CE player moving into the space. Not to mention the plethora of other video centric sites online.
Mark: Netflix is also great for traditional TV providers. TV works. TV works for any number of subscribers or viewers. 100pct of the digital bandwidth that TV uses is designed, managed and operated purely for the distribution of TV and complementary features. It will work.
Richard: It might. Depends on consumer adoption of Connected TVs. Samsung is happy that 40 per cent of buyers are even connecting it all at this point.
Mark: Netflix should end up as the only “TV” provider that truly works on the internet, Which means that content providers like the broadcast and cable networks can be paid by Netflix on a per sub basis for their subs who want to subscribe via the net, and from traditional tv providers for those who want buffer free, (relatively) full quality TV the old fashioned way.
Richard: There should not be an only of anything. Competition is better for everyone. If TV providers, broadcasters and cable networks want to make money… they only need to ensure they monetize it in any number of ways on the web. Then they will make money when Google TV owners watch it on TV. The other aforementioned parties also need to utilize the other platforms available – although they are under shared rev deals – such as Samsung. Samsung sells more TVs then anyone. It’s probably more important to have a good app on their platform then worry about Google TV.
Mark: Oh, and one more thing. Expect your internet bills to go way way up as ISPs make it clear that all this video over the internet is going to require billions in upgrades. The irony is that while you may not like paying for cable channels you don’t watch. You will end up paying for cable channels on the internet that you don’t watch as well. In this case you will be paying via higher net bills for the extra bandwidth required to stream cable channels that your neighbors like to watch
Richard: Yes, bills will go up. And the issue of Net Neutrality will become more of a burning issue.
Thanks for the space to comment
Best
Richard Kastelein
Founder
http://www.appmarket.tv
http://www.agoramedia.co.uk
From MC> Richard, whatever you do, don’t go to work for a cable network. You will put them out of business. You ignore all the true numbers of the business. What you suggest sounds nice to netizens, but it makes zero economic sense.
Comment by Appmarket.tv -
I remember many years ago noticing Google domains were on class A IP addresses. That’s when I first realized the kind of plans they had. Years later and we see how they made use of it. Ranging from having all their services running on TLS, to Google TV, etc.
The folks at Google really look ahead. This is surely what they are thinking on this subject as well.
Google is working towards profiling as many people as possible to the best availability i.e. Identify target customers based on what they watch on “TV”. Correlate that with data from web usage, email, calendar, content network(this is almost the whole WWW) etc. for maximum targeted ads.
So for Google it’s all about customer base and profiling at this moment in time. As far as I know Youtube was always making a loss and am not sure how this has changed recently but with added HD capabilities on Youtube this will cost Google more for sure. So one could also say: “Why did Google purchase Youtube?”
Google’s openness contributes towards its success in that people are not defensive against its products and everyone joins in because it’s free. So their products’ userbase grows rapidly. Eventually Google will have profiled users to such extent that advertisement provided from their platform will be unparalleled by anyone else.
Now since you can watch Netflix through Google TV, what is stopping Google from showing ads on top of the Netflix streams?
Let people create the shows, let Netflix pay for the bandwidth and Google takes the advertisements money. This is genius.
That aside; if Google started to charge customers it would not gain as many customers which would be in conflict to their primary aim of profiling users and gaining a larger user base.
Although Netflix model is good, a lot of videos are being pirated through services such as TVUPlayer and Sopcast. Also a lot of pirating is done via torrents and peer to peer file sharing application such as thepiratebay.org and eMule. Those geeky options aside there are websites such as mmashare.com, Dailymotion.com and ***Youtube.com*** where users can find pirated videos.
Knowing there are fairly large number of people who will not pay for TV shows it’s impossible to kill pirating within the current legal system. However Google still benefits from Advertisement income and user profiling through counterfeited videos on their network, so they have nothing to lose.
This is a war I can not see Google losing.
P.S. there is a spelling mistake in the sentence
“Its one more reason to think that Netflix has won the streaming wars”
there is a need for an apostrophe between “It” and “s” 😉
From MC> Writing from a phone mistakes are bound to happen. Proofreading is tough..thx for understanding 🙂
Comment by jensontaylor -
You don’t think Google’s cash deep pockets couldn’t totally transform network TV? Google knows advertising on the web. They currently own that space (subject to change). They are so deep in the pockets they could hire the best and brightest from network TV and start their own network just to spite the “old” guard (ABC, NBC, and CBS). If they are driving around unmanned cars….they can reinvent broadcast TV and win bigger than Hulu or Netflix.
From MC> If what I read in the WSJ is true. Most of Google’s cash is overseas and they dont have access to as much as people think… but thats another issue. The bigger issue is that i dont see them wanting to make the multi billion dollar investment that it would take. If I am wrong and they do, then you could be right
Comment by neomogo -
Your arguement is pretty sound and you approach the subject from the television networks viewpoint (with a pretty heavy bias and favortism to netflix). The truth is the major networks aren’t giving away the content for free, even on the web. There are still ads and although web advertising takes in less revenue (i.e. worth less) it still serves a financial purpose for networks such as CBS, NBC, and FOX. So what is Google TV? It’s simply a computer hooked up to your TV. You can grab a laptop and go to http://cbs.com/ and start watching shows, it’s a computer, it has a web browser, it’s fine. You hop on your Google TV go to CBS and the content has been blocked. It too is a computer, it has a full web browser (with flash), it unfortunately is not fine.
I have no problem with big networks trying to seek more money, they’re businesses and businesses need money to survive. However they’re hurting consumers… the people who actually watch their networks shows, rather than going to advertisers with user base statistics (e.g. 20% of our web traffic goes to internet connected TVs, you should pay more).
Quite simply TV networks shouldn’t block you from watching their shows because you have a different device. Would you like it if youtube would only work on Android phones? I own an android phone and I would be incredibly mad if Google were to pull such a stunt. I hope you will consider the consumer side in this fight and understand that web connected TVs are the future, do you really want your future blocked by the TV networks because they don’t like the model of TV you own?
Comment by seattleandrew -
Sounds like congress will have to get involved, and end up upsetting half of the populace no matter what solution they come up with.
Hey Mark, what does this mean for consumers who use youtube to comment on “copyrighted” clips. This starts to stink to high heaven if consumers continue to be shut out from being able to comment on product they see when the all the providers are sharing content in one way or another without always paying for it.
Comment by Alessandro Machi -
I think the last paragraph is really the most important aspect for consumers. Companies that provide cable access are usually the same ones that consumers use for their ISPs (thanks to discounted bundling rates and limited competition in areas). So, the cable companies will simply shift their pricing with the shift in demand to internet video.
Netflix might also need to alter their pricing for tiered streaming features or packages. There is a finite market when it comes to potential subscribers. They could also pay out to networks based on user viewing.
Interesting article, from someone who knows all about the internet and television…
Comment by slovak34 -
I remember reading a couple of years ago that Google was buying hundreds of millions of dollars worth of fiber optic cable…seems like it was all for this big push or at least partially for this. Not to mention they have been acquiring bits and pieces of technology and isp companies for years.
From MC> that doesnt solve the last mile issue
Comment by aybecker -
How will the upcoming ‘white space’ technology fit into the equation? I believe Google will own WS, establishing ubiquitous internet connectivity over the bandwidth previously used by channels 2-13. Won’t that be ironic, when we’re still getting TV over that bandwidth, just via Netflix & Google…
From MC> white space is pretty useless in major markets because of the density of usage. So not much
Comment by cafn8ed -
I’m about to watch the Rangers game and will comment after. While at Stanford I had the pleasure of meeting the guys at Redpoint that funded netflix. Many people thought they wouldnt survive…im glad to see Netflix doing well now.
ryan
Comment by ryanmendezstreetball -