Entertainment and the Internet

Mark Cuban is one of the inventors of internet-based video, having gotten rich selling Broadcast.com to Yahoo in 1999. He still admits he doesn’t know that it is desirable for all the new means of network distribution to dominate entertainment. He owns a television network, movie theaters, the Dallas Mavericks (where he bars fans from using phones or tablets while at an NBA game), and, of course, “Shark Tank” on ABC.

Why does he make such investments considering the background? Simple. He said in an appearance at the Code/Media conference (( Code/Media in Laguna Niguel, CA, was set up by the Re/code service. The conference was organized by Re/code’s media reporter and editor, Peter Kafka. )) on Feb. 18: “I don’t want my 16-year-old daughter to watch Netflix with her boyfriend. And I want to go to a movie so I don’t have to talk with my wife for two hours.”

Cuban was joking a bit, but there’s no doubt his judgment of business doesn’t matter. The folks in various entertainment/technology/internet enterprises tend to be committed to whatever line they are in. The rest of us are still figuring out what works.

Roku, Apple TV, and more. This jumble of services is delivered to smart phones, tablets, and PCs. In lots of homes, it comes to your TV through Roku, Apple TV, sticks from Google and Amazon, or sometimes features of a “smart TV” itself. For most homes, the internet device sits next to a cable box, but it is become an increasingly feasible choice to drop cable service and rely on the internet.

Kevin Tsujihara, CEO of Warner Bros. Entertainment, is one of the pushers behind industry UltraViolet, a program for cloud-based sharing of recorded Bluray recordings among multiple devices. But Disney, one of the industries most successful players, has developed its own, more successful solution. And the public has shown little interest in figuring our how to get the disks they have bought registered and replayed on UltraViolet. But Tsujihara still sees UltraViolet developing into a solution.

Internet-based entertainment appears to be based on two rival areas of attack. The set of mostly short-form video, the work of both amateur and professional programmers, appearing mostly on YouTube and Facebook and traditional video, mostly movies (including a lot of offerings that used to be know as direct-to-disk films) and TV shows, are being sent out through a variety of distribution, sometimes subscription, sometimes rental.

Chernin and Sling. DISH Network’s Sling TV is an extremely interesting startup because its program, in addition to a lot of competition with Netflix and other entertainment video, includes live sports events on ESPN and ESPN2—programming that, until now, was available only with cable service. Peter Chernin, the former president of News Corp. and now a production backer with the Chernin Group, told the Code/Media conference that he sees the Sling approach—likely to be offered by others—that live TV over the internet is the future.

“I’m not sure what the timeline is,” said Chernin. “But there’s clearly more money to be made online. Fifteen years ago people said sports would never be on cable.” (In a bit of a slip, he means internet, not the traditional TV cable channels.) And it is world business. In the U.S. we tend to think of football, baseball, and basketball. In the rest of the world, there is soccer and, as demonstrated recently, cricket, especially in India and Pakistan.

The existing TV networks are also pushing hard into the internet business as an outlet for current broadcast, not just recent shows. HBO has long made its programming available through HBO Go over the internet only as an alternative for cable subscribers. A new service is a direct subscription for those who want only internet service. Now NBC will soon offer the content of its owner-operated stations to consumers who want to subscribe only over the net in nine large cities, including New York, Los Angeles, and Chicago.

Internet regulation. One issue that remains a threat to how content is delivered over the internet has been the failure of regulation to keep up with the progress. So far it is working in a mostly acceptable way while politicians continue to argue over the future. But any day we could start to see issues where, for example, a network carrier such as Comcast or Verizon agrees to provide quality delivery to one competitor—or maybe just its own service.

The effort to settle it has sank into a political mess. The Democrats want internet carriers to be regulated like utilities. Republicans want pretty much everything left alone. Federal Communications Commission Chairman Tom Wheeler, a Democrat, tried to find middle ground but was jumped on by Republicans in Congress and his fellow Democrats, led by President Obama. Congress is now working on a regulation plan that probably will pass the FCC on a party line vote and be attacked in both Congress and the courts.

Cuban, as usual, took the tough role. He seems to respect Wheeler, but doesn’t think much of his effort to come up with a version of the Democratic plan because he will be replaced in a couple years by a new Democrat or Republican with unknown intentions. The action of the FCC “will f*** everything up,” he told the conference in his usual blunt way. “Having [political appointees] overseeing the internet scares the s*** out of me.”