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2004 World Technology Awards Winners & Finalists
Please describe the work that you are doing that you consider to be the most innovative and of the greatest likely long-term significance.
The Big Picture Leigh Gallagher
The boob tube is hot again, thanks to crisp, high-definition sets and broadcasts. High-priced hype? Mark Cuban isn't waiting to find out. He's betting a chunk of his billion-dollar fortune that TV's future will arrive sooner than you think.
Mark Cuban does nothing in half-measures. The Dallas-based Internet billionaire loves basketball. Instead of getting season tickets, he bought the Dallas Mavericks. Instead of flying first class, he bought a Gulfstream V--over the Web. He can't even watch TV like a normal person. In 2000, shortly after he sold his Internet media service Broadcast.com to Yahoo for $5.7 billion (netting $1.7 billion of stock for himself), Cuban went shopping for a new home theater: "I just said [to the salesperson], 'Give me the latest and greatest of everything.'" He got a 100-inch projection screen and, along with it, the new high-definition channel that came with DirecTV. All it had on was a continuous loop of guys kayaking and snippets of an old NBA all-star game. It was incredibly frustrating, yet the picture quality was so amazing, he says, "I was glued to the screen." He went to an online forum and read dozens of posts from like-minded souls, all of them bedazzled but wanting more. "Why weren't other companies getting into it?"
The average couch potato would have just shrugged and changed the channel. Cuban changed channels by bankrolling one. In the biggest bet of his 45-year-old life, Cuban has invested a sum exceeding $100 million to start HDNet, the first all-hi-def network. Just three years old, HDNet has 1,200 hours of original programming shot in high definition and almost as much in licensed content. It's on 24 hours a day and at any given time has eight crews shooting all over the world; it airs 15 hours of new, original programming per week. A second channel, HDNet Movies, shows feature films like The Shawshank Redemption, The Real Cancun and Her Alibi. Cuban has deals with six Hollywood studios for the rights to convert their films from 35mm to hi-def.
High-definition TV is a digital format that offers picture quality up to ten times as sharp as standard TV's (based on the screen pixel count), typically displayed in a wide-screen format and enveloped in digital surround sound. After years of empty hype, hi-def is finally catching on. Set prices are dropping, with some already below $1,000 (see "Is the Price Right?", p. 80). Consumers bought 4 million sets last year, up from 2.5 million in 2002. The number of homes with HDTV monitors will surpass 10 million this year, says Yankee Group.
Following the track of other electronics markets that started slow and then reached a flex point, says Cuban, HDTV is poised to hit its stride. The broadcast networks have been beaming out hi-def shows since as early as 1998, but until recently few homes have had an HD-capable set, and only 13% of TV homes get their fare over the air, anyway. With its head start, Cuban's HDNet has been able to reach 66 million homes, or 60% of U.S. television households, and is carried on the DirecTV and Dish satellite networks and all the big cable systems except Cablevision, Cox Communications and Comcast. Cuban gets an undisclosed fee per subscriber from the cablers for the right to carry HDNet and plans to make money selling ads and licensing content.
Cuban is early, but scarcely lacking for competitors. ESPN, Discovery, Showtime, HBO and Bravo all now have their own hi-def channels; Voom, a satellite service launched in October by Cablevision, offers 30 HD channels. In September the In Demand pay-per-view service, jointly owned by Comcast, Cox and Time Warner, launched a cable channel called INHD. "It was conceived as a Cuban-killer," says one satellite executive.
Cuban sees competition as a beautiful thing. "A consumer will never say, 'Okay, I have enough. I don't want any more,'" says Cuban, who thinks he will be able to compete on content. "HBO didn't start out with The Sopranos. They started with Robert Klein live," he says. HDNet's fare isn't exactly Emmy-worthy. Any given day it offers World Extreme Cagefighting, Bikini Destinations: Palm Springs and Ostrich: Ultimate Survivors.
But if the day comes when everyone watches in HD, and that's still a pretty big if, Cuban has beachfront property. Each high-definition channel takes up the bandwidth of five or six low-definition digital channels, so there's not enough room for each of the hundreds of cable and satellite channels to come out with its own high-definition network. "You're going to have a golden age of television for some and a disaster for others," he predicts. The battle will be over whether satellite or cable space now devoted to five obscure items like Taxidermy Trails and More Reflections with Father Leo Clifford will be tossed aside to make room for a much crisper rendition of a cop drama or a basketball game. It would seem to be inevitable that as sets get cheaper and more ubiquitous, hi-def shows will win more of these battles.
HDNet still badly needs to get picked up on Comcast, Cox and Cablevision, which own 40% of cable subscribers. And whether anyone--except for the makers of televisions and set-top boxes--will profit from HDTV is unclear. Cuban, who now has four HDTV sets in his home, will say only that his return on investment is "very negative" and that he has added to his initial investment.
Not everyone shares his vision for an all-HD future. "This is not a product at the moment that's being driven by consumer demand," says Fred Dressler, executive vice president of programming for Time Warner, which agreed to carry HDNet and HDNet Movies in December. "We don't think that everyone is going to want hi-def, but we're going to offer it."
As far as Cuban is concerned, the hi-def naysayers are as off the mark as were the Internet pooh-poohers when he was pitching Broadcast.com in early 1995. "They don't see that things are changing," he says.
Cuban, now married with a 4-month-old daughter, is decidedly more sedate than his cranked-up former self. But his hatred of losing persists. "I'll spend as much as it takes," he says. He's worth an estimated $1.3 billion, having sold most of his Yahoo shares well before the crash.
"People thought FM radio was a joke," he says. "This is that big."
Cuban started out in life as a blue-collar kid in Pittsburgh. Although he says he was goofy-looking with funny teeth and “coke bottle” glasses, Cuban had a gift for selling things — starting out with a garbage-bag route in his neighborhood and working his way through greeting cards, magazines and liquor.
Putting himself through school at Indiana University, Cuban continued to come up with creative ways to make money. He gave disco lessons and started a chain letter that paid for an entire semester of school. Soon after college, having never taken a computer class and without even owning one, Cuban started his own computer consulting firm.
Working round the clock, Cuban often taught himself to do what his clients needed — after he sold them his services. “The goal was to say yes to anything. I used to stay up all night. ‘You want this written in dbase? You want it in BASIC? Sure I can do it,’” he says. “[But] I’d have no clue.” By 1990, and after seven years of nonstop work, Cuban’s company, MicroSolutions, Inc., was grossing $30 million a year. It was then that Cuban cashed in for the first time, becoming a millionaire after selling his company to CompuServe. Then Cuban retired — but not for too long.
In 1995, he was living in Dallas but daydreaming with an old college buddy about his beloved Hoosiers and how to catch their games. Then came the idea: Why not broadcast them over the Internet. Broadcast.com was born and his early retirement was over. Soon, half a million people were listening to radio and TV stations carried live on their Web site. Cuban’s employees worked for 10 bucks an hour but with stock options as incentive, they were coming up with fresh ideas — like streaming President Clinton’s Grand Jury testimony and a Victoria’s Secret fashion show. Realizing the gamble potential of this new venture, Cuban got the group together and spoke frankly. “I said, ‘Look folks, I think we’ve got something here. And one of two things are going to happen,’” he recalls. “In five years from now, we’re either all going to be millionaires… or we’ll be out of business and we’ll all just be friends.” But the gamble paid off spectacularly, first when Broadcast.com went public, and then, when Yahoo purchased the company. In the end, 300 employees became millionaires and Cuban himself was left with approximately $2 billion.
With his new wealth, Cuban went on a shopping spree most of us could only dream of. His first purchase was a 24,000-square-foot Dallas mansion. He still lives like he’s in college, spending more of the time in his study, perched over one of the five computers that are constantly in use. Although there are dozens of other rooms, he uses only a few of them and keeps the rest almost unfurnished. Standing in the middle of his nearly-empty living room, Cuban says there’s a perfectly valid reason for that. “This is home plate,” he says. “This is where we played whiffle ball New Year’s Eve.” This past Christmas, Cuban went on the Internet to make his second large purchase — a brand new Gulf Stream 5, the fastest corporate jet in the world. And in true new-media mogul fashion, he bought it on the Internet, paying $41 million for it. His new toy would become the largest online purchase in history.
In March, Cuban acquired the last item of his spending spree — for $280 million, he purchased his hometown NBA team, the Dallas Mavericks. His enthusiasm proved contagious, as the Mavs ended the season on an impressive winning streak, missing the final playoff birth in the Western Conference by just a few games. Next year, their 10 year absence from the postseason could finally end. As he continues what he calls “his labor of love” with the Mavericks, Cuban is excitedly developing new ideas for a state of the art arena — so advanced that he’s started yet another business to market the new technology. Ultimately, Cuban says he plans to stick to his proven success formula for all future endeavors. “When I got into the PC business [I was told], ‘This is the way it’s always done. We’ll never need a PC. We’ll never need audio or video over the Internet… And you shouldn’t get so close to your players. And you shouldn’t go out there and travel,’” he says. “Shouldn’t, shouldn’t, shouldn’t — is usually an indication I’m doing things right.”
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