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Sunday, June 08, 2003

D: Interview With Ted Leonsis And Mark Cuban

The following are my notes from the May, 28, 2003 interview with Ted Leonsis and Mark Cuban, conducted by Kara Swisher at D: All Things Digital. As with all my conference notes (wherever, whenever), please don't mistake these jottings for a verbatim transcript or a complete portrayal. They are necessarily paraphrased and incomplete, and the product of my highly selective and imperfect notice and attention.


Swisher: Digital issues and sports, where's it headed? The Sharks in San Jose just put WiFi in the stadium.
Leonsis: The great thing about sports is you get paid for your content, and games are a commercial to bring in more customers. Sports teams are really underleveraged assets, will be of quite high value in the broadband universe.
Cuban: My philosophy with the team's arena was technology is first. One of the things I learned is that we don't sell basketball, we sell sore throats—the chance to stand up and scream.
Leonsis: We're in the bricks and mortar business, we bring people in. It's about the whole experience. We get 8-12 million hours of our community's time every year. For the audience, going to these games, it's about their shared experience.
Swisher, to Leonsis: You gave the players laptops.
Leonsis: Oooh! (Audience laughs.) We're not doing this for the technology, we're doing it for the customer service. Email is normal now. It creates intimacy, and because there's this intimacy, even when the fans are mad at you the fans will say, "I love what you've done with the team. But..." The relationship somewhat inoculates you. (Missed bit here; he's talking about time shifting.) I wanted to catch the 11:00 p.m. SportsCenter about the Mavs game last night, and couldn't. But this morning on AOL for Broadband, I was able to do this on my own schedule.
Cuban: We've been doing that since 1999! (More laughs.)
Leonsis: We want to extend the time of the event to before and after the game, and bridge through the off season.
Cuban: One of the things we've learned is we compete not with other sports, but with other people. Technology enables us to pull people in, grab them by the throat, reinforce their passion for the sport, use up as much of their time as possible. (Talks about an important game that had a 6 p.m. start time. Cuban sent an email to employers asking permission for fans to leave early. Due to the timing they expected the lowest, but had the highest, attendance of the season.)
Leonsis: Sports is being priced out of the realm of the normal fan. One thing we'd like is to have flexible ticket pricing to fill seats, get a new generation in for games. Get the word out about reduced prices using our portals.
Cuban: (Talks about the fact he participates in his team's interactive online forums.)
Swisher: Probably a really intelligent discussion: "You suck!"
Cuban: I write under a pseudonym...No, I'm not going to tell you!
Swisher: What do other team owners think of using digital tools to enhance the sports experience?
Cuban: You have to be creative in this market. Many don't get it.
Leonsis: We're constantly looking at building asset value.
Swisher: Do you see bypassing the networks?
Cuban: One of the reasons we created HDNet is to help create an entirely new viewing experience. Not doing network deals at some point is something you look at.
Leonsis: Just like the Internet, you need multiple revenue streams.
Cuban: (Talks about dilution of audience.) There's not enough bandwidth for all the networks in a high definition universe. Means there will be more value to each broadcast, and an increased value to sports. It changes the economics.
Swisher: What about just broadcasting over the Internet?
Cuban: A couple of years ago I would have said yes to that, but high definition is now too compelling. HDTVs cost sub-$1,000, and will make that broadcast method too attractive.
Leonsis: People are not just fans of the teams, but of the players.
Cuban: If I sold a Webcast of Dirk Nowitzki getting his hair cut, people would pay. It's a passion. What kind of hair gel does he use?, this is the kind of email I get. In sports, it's a different universe. They're talking about my hair yesterday on ESPN. What the hell is that? Shows you how crazy it is.
Leonsis: We essentially bought 4 blocks of downtown Washington, D.C., and two sports teams, for less than we paid for ICQ. These sports investments are one of the few recession-proof, stagnation-proof assets. People vote with their time, money and passion. I'm pleased with the investment I made. I just wish we could make a playoff series.
Swisher: Is there an ideal device for sports delivery?
Cuban: This may be self-interested, but high definition TV ubiquity.
Leonsis: Technology is getting fans and teams to be more connected and intimate. While it sounds trite, it goes a long way toward giving fans that personal touch. We get emails all the time, my son is going into brain surgery and has always wanted to meet Michael Jordan. That's a small gesture. There's something heroic and special about these players. It's our duty to bring these people closer together.

Audience Questions for Leonsis and Cuban

Audience member: What do you see ahead as far as 802.11g? 3D?
Cuban: We've got access points we've used and tested. The bigger issue is not detracting from the communal experience. No reward now for being the first in 3D, but we're looking at it.
Leonsis: The video game business is much bigger than the sports business. Sports teams are small businesses, but all the ancillary businesses are really big. Sometimes the teams should own the games, rather than licensing the rights out to others. The next generation of sports team ownership will be thinking along these lines.
Cuban: (Nods.) You can't be dependent on your league office to make the best deal.
Audience member: (Questioner says his company can deliver DVD quality video via broadband, but it involves a time shift.)
Cuban: It's got to be real-time. Once they can get the score on the Internet, that's it.
Leonsis: This is why TiVo isn't that big for sports.
Cuban: Look at what happened with NBC and the Olympics. (More.)
Audience member: (Asks about HDTV, other players.)
Cuban: Competition and growth in this field is great for everyone.
Leonsis: In sports, there's this unbelievable clarity about winning and losing, and the opportunity for redemption and renewal. Your fans, like great consumers, forgive you, let you come back next year and try again. There are great lessons in sports that you can apply to business.
Swisher: How do you look at the Internet right now?
Cuban: It's maturing, and that's great. I think I was Novell's third reseller back in '83. Used to be, the more you knew, the more you could identify what would be the next big thing. Now, you can't rely on that, you need to be looking around and paying attention.
Leonsis: I feel like a mayor of a city: you have to make sure the water is clear, the street is paved, the lights are working, there are no power outages. After you do all that very well, people will let you introduce them to the new theater, the new mall. (In response to the question about being 17 and starting over...) I'm right where I want to be, making products that tens of millions of customers enjoy every day, and owning a couple of sports teams.

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