Can Mark Cuban Take Hollywood Hi-Def?

In part one of this interview, the HDNet impresario tells us how he's going to change the way we watch movies

PHOTO: Tim Heitman/NBAE/Getty Images

It's just before a Mavericks basketball game at the American Airlines Center in Dallas. ”Bringing Down the House” blasts from the speakers. Fat guys in blue face paint scream. Kids wave oversized foam hands. But there's no bigger fan than the Mavs' 48-year-old owner, Mark Cuban. Dressed in a sleeveless gray T-shirt, jeans, and leather sandals, Cuban is kicking back on a black leather sofa in the lavish underground hangout he calls the Bunker Suite. There are five plasma screens on the wall, a full bar, and a rack of Mavs jerseys to choose from for game time.

Of all the billionaires in the world, Cuban acts like he's having the most fun with his money. A working-class geek from Pittsburgh, he had the guts and prowess to gamble on tech stocks and start-ups long before the world knew about the Web. Since making his fortune with Broadcast.com, an early Internet radio site, he has been building his digital empire: a cinema chain (Landmark Theaters), a high-definition television channel (HDNet), and a movie company to put out the goods (2929 Entertainment). ”The ultimate objective is just to have fun,” he says, ”enjoy life.”

Cuban's success hasn't come from being polite. When he's not calling the Google guys ”morons” for buying YouTube, he's taking on Hollywood's antiquated distribution methods by releasing a film on TV, in theaters, and on DVD on the same day. So what drives Cuban to risk his money and reputation again and again? Partly, he says during an extensive interview, his love of technology and all things digital.

In the first of two installments, Cuban discusses his thoughts on the nascent industry for HDTV.

IEEE SPECTRUM: What are the biggest challenges facing the HDTV industry?

CUBAN: Programming and marketing. You know, we've got to compete with programming like everybody else. We've got to come out there and develop great programming, and I've got to get out there and market it. We've got a great foundation from a programming perspective: HDNet Movies will have 12 day and date releases.

SPECTRUM: In the Landmark Theaters and other theaters?

CUBAN: It will play other theaters as well. And on DVD. And so if you want to watch it for free, you've got to be an HDNet Movie subscriber. That's part of how we build up our base. You know, get great movies like Enron: The Smartest Guys in the Room [2005] that's only been showing on HDNet Movies, or you have to buy it on DVD or see it in the theaters.

SPECTRUM: How is that all going to work?

CUBAN: Well, it's a simple process. If you're going to create content, create it digitally and then just find out how consumers want to consume it. Sometimes they want to consume it in the home. Sometimes they want to consume it on their PDAs. Sometimes they want to get out of the house and go into a theater. And they want to consume it in different quality levels: Super hi-def, regular hi-def, on a small TV, analog to download, whatever. If you want to be able to control your own destiny, you want to have that vertical chain of control. It's that simple a concept. By owning Landmark Theaters, we can take all of your movies and put them in theaters. By owning the content, and producing the movies, we can make the choice: put them in theaters, and put them on DVD, and put them on HDNet movies, all the same day. And price it so that you would have to pay a premium to get it on DVD, and you get value if you subscribe to HDNet movies, and you get that movie for free as part of your subscription. Or if you just want to get out of the house and just go on a date with your wife, go to a Landmark or other theater that's playing it. However you want to consume it.

SPECTRUM: What happens in Hollywood then? What does this do to the current distribution model?

CUBAN: Well, it should make things better for Hollywood. Hollywood thinks it's a great idea. The people who are complaining are big theater owners [who are] saying, ”Why would people leave the house if they can get movies the same day?” I'm like, Wait, you think you can't compete with someone watching a 27-inch TV, with the kids screaming, or the telephone ringing versus getting out of the house to go on a date? You're gonna have cabin fever sooner or later. You can watch every Mavs game on TV but it's a whole different experience when you go to the game. And in fact, there's research that says the more games you [put] on TV, the better your attendance, because people develop a stronger allegiance. The movie theater industry has a long way to go. They still think they are in the movie business. They still think owning a theater is about showing movies. It's not. It's about being a great place to go on a date; it's about being a great place to go with your friends. It about a great way to get out of the house so you can get away from the kids and enjoy yourself. They just can't figure that out, so they feel threatened.

SPECTRUM: What about just the HD set adoption?

CUBAN: That's a no-brainer. That's happened left and right. I mean, these screens are under a thousand bucks. Three years ago they were $5000. They keep going down in price. I just saw one today for $999 bucks. You could buy a 42-inch LCD for $400 bucks. It's over. It's over. Why would you even buy an analog set?

SPECTRUM: So why then is it taking so long for there to be more HD content?

CUBAN: Because it's owned mostly by public companies who don't want to spend the money, which is part of the opportunity for me.

SPECTRUM: It just seems like there would be tremendous opportunity.

CUBAN: Amen. Amen, that's exactly why we did it. Five years ago when we started HDNet, everyone said they're so expensive, no one is going to want to buy those TVs. I'm like, they're just PCs, right? They are the same type of technology. So, what does that mean? The price is going to go [down]. Performance is going to go [up]. No one is coming up with improvements on tube TVs and analog TVs, so it's inevitable. All I have to do is be there when it becomes ubiquitous. Here we are. It's not ubiquitous yet, but it's getting there.

SPECTRUM: So how does owning a basketball team fit in with that? Does it fuel that?

CUBAN: Well, it helps fuel it in that, for high HDNet subscribers in Dallas, I could put the Mav games on TV and that gives people an incentive to [get] HDNet.

SPECTRUM: Yeah, it's simple. And yet I've been surprised there hasn't been more.

CUBAN: It's just expensive. You can't convert Roseanne to hi-def; it was shot on tape. Or, if they have special effects that were mastered on tape, the show doesn't convert to HD, it doesn't work...When you watch something on ESPN or CBS, it looks great. And then you watch something on one of your other [channels] and it looks like something's wrong. That's because it's been converted. Why? Because some of the stuff just won't convert. And Comcast wants to pretend they don't charge you extra for it. They just charge $5 for the box, which is the same as saying they charge you extra for it. Other companies don't charge you for the box. They just charge for the content. But if you look at INHD, they have no programming, but you can watch the same rugby stuff and it looks great. That stuff was shot in HD. The networks, the cable networks in particular, aren't willing to convert all their stuff over, because they already have so much licensed that's not HD-compatible. If it goes to HD, they look [terrible]. So, that's an opportunity for me.

Click herefor the next part of this interview, Cuban takes on YouTube, Bit Torrent, Microsoft, and Google.

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