Cuban: Netflix Is A Complimentary Service

Video over the Internet is touted as a threat to cable, but HDNET CEO Mark Cuban isn't worried.

There is nothing Netflix can do that cable and satellite companies can't do. When cable and satellite companies pay for better online experiences it will be Net-who, Rok-what? said Cuban, who also owns the Dallas Mavericks.

Cuban was a part of a panel at a UBS Conference this week in New York. He argued that viewers aren't ditching cable service to watch streaming video in droves, and that traditional TV will remain a dominant player for some time. Something like Netflix is a nice complimentary service, Cuban said, but it won't be a primary option for most people.

Netflix is the biggest provider of streaming video. The Los Gatos, Calif.-based company had 16.9 million subscribers in September, which represents a 52 percent increase from the previous year.

Netflix has shifted its business model from a DVD rental operation to focus on offering streaming content. It has used devices and services like the Roku player, the Apple iPad and Google TV to expand its audience by reaching the TV screen as well as computer monitors. Yet despite its growth, Cuban says Netflix, Roku and other over the top video providers lag in service quality.

Something like Roku is streamed over Wi-Fi internet, which is the worst possible way to do that, Cuban said.

Roku vice president of business development Jim Funk and Slingbox founder Blake Krikorian were not willing to accept Cuban's assertion that Netflix and other over the top services are complimentary at best.

The fact of the matter is, if the cable companies did their job, none of these (over the top service providers) would exist, Krikorian said. It's because if I'm the consumer, I'm not thrilled with what I'm getting from cable companies and satellite providers.

Funk said there was a segment of the consumer population who did not want to pay the additional fees and expenses that come with cable and satellite subscriptions.

But for Cuban, money is the issue -- specifically, paying for content licenses. Speaking of services such as Google TV, he said, It can't do much if it doesn't have access to content. The key to over the top is cash. Money plays, Cuban said. Recently, Google TV found itself in a bind when various networks such as Fox, ABC, CBS and NBC moved to block their online content on the Internet TV service.

ESPN doesn't fear over the top services. The company cited a recent study from Nielsen on whether consumers cut their cord for alternative services. The study found only 0.28 percent of consumers had done so.

Krikorian said over the top services offer of free content, easier access and a better experience than cable. Another panelist, Kevin Krim, Bloomberg head of global web properties, said over the top is better for certain genres, such as comedy. Yet, Cuban stood pat in his belief cord cutting was a fad.

I actually think Farmville is the biggest threat to TV, not over the top, Cuban said. His theory was that people used to watch TV to pass the time when they were bored. Now they play Farmville and other games like it.