What convinced you that HD would be the wave of the future? Can you tell us a little about your entry into the market?
Cuban: I always look for conventional wisdom that is wrong--then (I find) opportunity. The conventional wisdom of the late 1990s and early 2000s was that HDTVs were too expensive and would always be that way.
I looked at HDTVs and saw not only a compelling TV experience but a digital product that would follow the same price performance curve as all other digital products. The features and performance would improve while the price came down quickly.
It was pretty obvious to me that analog TVs weren't going to get better, while digital would get better and cheaper to the point that analog would go away. Combine that with the coolness factor of being able to hang a TV on your wall, and to me, it was a no-brainer.
With that in mind, Phil Garvin and I started HDNet. The process started in 2000, and we launched on Sept. 21, 2001. Our challenge in starting HDNet was in finding and creating content in HD, getting distribution and an audience, and establishing ourselves before the rest of the TV world realized the value of HD.
I think we are well on our way to establishing ourselves with great programming, from "Dan Rather Reports" to NHL hockey to Major League Soccer to "HDNet World Report," plus our day and date releases of original movies like Oscar-nominated "Enron: The Smartest Guys in the Room," Steven Soderbergh's "Bubble" and many more. Of course, more information is available at the HDNet and HDNet Films Web sites.
In five years, how will consumers be entertaining themselves? Can you give us your take on what the connected living room looks like?
Cuban: There are three questions there. One is, what devices will be in the living room? The second question is, what programming sources will be used? And the third is, how will they be connected?
I don't think there is any question that the centerpiece of any entertainment in the home will be the high-def TV, most likely an LCD (liquid crystal display) TV hanging on the wall. The question on this device is, how will we connect to it?
If TV manufacturers are smart, they will be compatible with the OpenCable Application Platform (the cable industry's software standard for deploying interactive services) and offer USB X.X and FireWire connectivity so that people can connect whatever devices they want.
I personally think that the optimal connection will be personally managed hard drives. In five years, a terabyte or more of storage on a hard drive will be less than $100. We should be able to fill that up with music and whatever content we want in HD format, connect it to the TV and, using our remote, choose whichever movies we want.
Everyone thinks content delivery will come from the Internet. It won't. It's too expensive and far too slow to deliver HD content. You just bought your 50-plus-inch LCD that is hanging on the wall. Do you want standard definition over compressed HD or the best-possible picture quality from your content?
Blu-ray Disc- or HD DVD-quality content or better will be possible, but you won't get that quality from a download. The reality is that it's cheaper and faster to send (hard drives with terabytes of) content overnight via UPS than it is to download it over the Net. Brown is faster than the Net.
So the smart company will send you hard drives full of content that you will pick and choose from. If it were up to me, DirecTV and the Dish Network would merge. They would buy Netflix and Hollywood Video, and then offer us 10-teraybyte hard drives full of all the content we could dream of that we can get for free or buy at a premium.
The hard drives would either show up at our door ala Netflix, be picked up at the store, ala Hollywood Video, or be pumped to a hard drive connected to our satellite connection (or cable connection) continuously. We then take those drives, plug them into the LCD TV and go movie-crazy.
Then when we get cabin fever or bed sores, we get out of the house and go to a Landmark theater (Cuban's company recently acquired Landmark Theatres) to see it on a big digital screen with the latest sound and effects.
You've talked about the possibility of making HD-quality movies available via kiosks equipped with hard drives or shipping people hard drives filled with movies. What option is best right now, and why do you hate DVDs so much?
Cuban: See above. I don't hate DVDs. I just like the flexibility, portability and choice of hard drives. You tell me which is easier to take on a plane: a 4-gigabyte flash drive with four movies in DVD quality, or four DVDs in their cases?
Now extend that to 100 movies on a portable hard drive. Which is exactly how I carry and review early cuts of movies for HDNet Films and 2929 Entertainment (Cuban's entertainment company).
You don't believe video-on-demand is a feasible model, but my friends say they don't want to go to a Blockbuster or wait for Netflix to send them a DVD by mail. They want to download movies off the Web. How long before we see this?
Cuban: You won't--at least not in the "I ask, I get" model. You may be able to download for overnight delivery via the Net. You may be able to download for 60-minute delivery if you are willing to take lesser quality. But before we get to bandwidth, you have to deal with the pirate phobia issues of the movie and TV business.
They won't let you download without so many limitations, it will piss you off more than its worth. You won't know what you can or can't do with the content, whether you own or are borrowing it and for how long. And you won't know what devices you can or can't use it on.
A perfect world, right?
That said, if you are OK with standard definition, you will be able to go online, find what you want and immediately stream it--which is the exact model that was Broadcast.com. "Want it now, watch it now" is fine. But it won't be in HD, and it won't be download.
To download or stream HD takes far too much bandwidth to do it for all content. If I thought 100MB switched, sustainable bandwidth to the home was a reality in my lifetime, I would be all for it. It's not with current or on-the-horizon technology and financial scenarios.
Bandwidth to and in the home are issues. How much WiMax, WiThis, UltraThat, XXMax bandwidth will be created in the home in the next five to 10 years? Will it be enough to supply four HDTVs in a home while recording favorite shows to four TiVos at the same time? All in streams of 8MB or more? Simultaneously? I don't think so.
How important has it been for HDNet to sign legendary newsman Dan Rather?
Cuban: Dan is amazing. This was a huge move for HDNet. It not only provides us branding and visibility, but it unleashes Dan to do the news reporting that he hasn't been able to do for years at CBS. I think people are going to be amazed at what he is able to accomplish, and that, in turn, will obviously help accelerate HDNet's growth even further.