NBC, Rio, And the Long-Term Value of Televised Sports

NBC’s Olympic efforts in Rio are falling short of its previous best. Through the first 10 days of the games, the broadcaster’s prime time coverage has averaged 27.8 million viewers, according to Nielsen. That’s more than enough to trounce CBS, ABC, and Fox, but it’s down 17 percent from NBC’s coverage of the 2012 games in London, despite a more favorable time zone that allowed for high-profile events where American’s typically excel, like swimming, to be shown live in prime time.

usain_bolt_smileThe fall off among viewers 18-34 has been even steeper, down 25 percent from London.

NBC execs are quick to point out that the ratings for its prime time coverage on its broadcast channel don’t tell the whole story. NBC Universal is showcasing the games live across its entire suite of cable networks throughout the day, some of which have drawn strong ratings in their own right. The final of the men’s golf competition, shown live on NBCU’s Golf Channel on Sunday, delivered the second highest ratings for any 90 minutes of televised golf this year after the final round of the Masters, despite the absence of many high-profile players. Between noon ET when it started, and 3:10 p.m. when it ended, the competition earned the highest household rating (1.02, with 1.6 million viewers) since Tiger Woods and Phil Mickelson went head to head at Pebble Beach in 2012. Go figure.

NBC also points to record-breaking digital viewership of this year’s games. Through Aug. 14th, NBC had delivered 1.86 billion live-streaming minutes, besting the total from the last three Olympics combined by more than 25 percent. NBC is live-streaming all the events in Rio as well as simulcasting it’s prime time coverage.

All in all, NBCU officials say, Rio will be its most profitable Olympic Games to day, thanks to the $1.2 billion in advertising it sold before the games began and an additional $30 million picked up in the scatter market. Although prime time ratings have been below NBC’s guarantees, network officials say they do not believe they will need to provide significant “make-goods” to advertisers, which would undercut the network’s earnings from the games.

The shift in Olympics viewing patterns, from broadcast channels to digital, NBC officials say, is consistent with the broader shift in TV viewing and that they’re prepared from what comes between now and 2032, when the network’s current contract for the games expires.

“We have provisions in our contract,” NBCUniversal Chief Executive Steve Burke told the LA Times. “If the predominant way of viewing changes over the next 16 years, we’re allowed to change the way we present the Games.”

NBC may not be quite as well prepared for the future of live sports viewing as it thinks, however.

For one thing, the competitive environment is much different online. While NBC’s diminished prime time ratings from Rio have still been enough to dominate prime time viewing, even with its record-shattering streaming numbers its digital audience barely registered.

According to a four-day snapshot by network analytics firm Sandvine, NBC’s streaming traffic from Rio throughout the day and prime time hours, accounted for only 1.5 percent of network traffic, compared to roughly 50 percent accounted for my Netflix, Hulu, and Amazon Prime.

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More to the point, with the exception of one brief spike during the final of the men’s 4×100 swimming relay, won by the U.S., NBC’s streaming traffic lagged behind e-sports platform Twitch, often significantly behind.

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Twitch, of course, is a platform, not a single event, with multiple users engaged with and viewing multiple live events concurrently. But that’s precisely the point.

On traditional TV platforms, content is king, these days especially live content, and most of the value it generates accrues to the content owner. Online, platforms matter, because they have the eyeballs. Much more of the value content generates online accrues to the platform provider, as any publisher using Facebook Instant Articles, or any music label battling YouTube can attest.

Amazon, which was born online, understands that, which is why it spent $1 billion to buy Twitch, and why it continues to make investments in its live video platform, such as these week’s acquisition of Curse.

It’s why Microsoft this week acquired Twitch-competitor Beam. And it’s why startup live-sports streaming platforms like FloSports continue to attract investment, such as this week’s $21.2 million fundraising round led by Bertelsmann Digital Media Investments, WWE, and Discovery Communications.

It’s also why Disney is spending $1 billion to acquire a piece of BAMTech, with an option to acquire more. BAMTech is currently majority owned by Major League Baseball Advanced Media (MLBAM), and 10 percent owned by the National Hockey League, which uses BAMTech to power its out-of-market streaming package. With Disney’s equity investment BAMTech will presumably now start handling streaming duties for at least some ESPN-controlled content. It also handles streaming for the PGA.

In other words, BAMTech is evolving into a major platform for live sports streaming in its own right. If that evolution is successful, and BAMTech becomes a self-sustaining online platform, perhaps even under its own brand, ESPN may not ultimately need Facebook or YouTube to reach a global audience.

The future of live sports online will be a matter of platforms as much as a matter of rights. NBCUniversal may have the rights to change how it covers to 2032 Olympics,  but maximizing its return from those rights is not something it can negotiate with the U.S. Olympic Committee.

Photo credit: Cameron Spencer, Getty Images

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