With Massive Hits on Its Web Site and Lackluster Ratings for Much of its Terrestrial Primetime Telecasts, NBC Must Have Gotten The Message That Prime Time Tape Delay Is A Dicey Concept When the US Fails to Deliver on the Medals Hype, But There Is Money To Be Made From the Web

Philip M. Stone February 27, 2006

On several nights regular programs on other networks beat NBC’s taped primetime Olympics coverage. On the other hand, the number of page views on the NBC Olympics web site in just the first week of Torino surpassed the total number of page views four years ago at Salt Lake City, mainly because of the huge amount of video now made available. It may just be that primetime taped delay coverage – watching when the network wants one to watch rather than today’s trend that we watch when we want to watch – is a concept for which the final whistle needs blowing.
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Having already locked up Olympic rights through 2012 for a huge amount of money, NBC cannot be thrilled with its Torino primetime results, although you can be sure the network will release plenty of hype and statistics to say how well it all went. But network executives will really want to take a very close look at all of that web video streaming and see if there is not a way to build a paying service that allows people to watch what they want when they want, assuming the network still cannot bring itself to show the big major live events during the American day.

The web site was a phenomenal success and it became the 116th most accessed address on the entire web in its first week. Its promotional deal with Google paid off handsomely -- Google providing a photo and link to the NBC site at the top of any search result for an Olympics keyword, and in return NBC gave Google pre-game and in-game 15-second video previews.

Torino is a hard lesson on how ratings depend on not only how well the US team does, but also on the new dynamics of our digital media world. The failures of the hockey squad and the ice skaters to score gold might also clue in NBC to hyping not just American stars, but also the sport itself and the excellence of others participating.

It is just a fact of life in today’s Internet world that people find out in real-time who wins and who loses. And it is the American mentality that they like to watch their winners and they have little time for their losers. In Torino a lot of US athletes who were hyped and were supposed to win, didn’t. And that became well known via real-time news (even if the video couldn’t be shown until after NBC aired its coverage).

So why should viewers spend time sitting in front of the box and having to go through an exceptionally large number of commercials every hour – 14% more each hour than with a normal broadcast in order to recoup the $750 million in rights and production costs  -- when one knows already that Michelle Kwan wasn’t even going to compete let alone win her dream ice skating Gold, that Lindsay Jacobellis lost a sure Gold Medal because of a stupid showoff move near the end of her race, falling and coming in second, that Bode Miller would screw up in the Super G and miss a gate, that Johhny Weir would miss his bus, get to the rink late and that seemed to destroy any confidence he had in finishing in the medals and instead he sank to fifth. …the list goes on. When you already know about those disappointments then why watch?

In fact the question becomes why watch when NBC wants viewers to watch when the network has posted on its Olympics web site video of all those events after the terrestrial broadcast. So if one really wanted to see Miller traversing on one ski then catch it on the NBC website at a time of your choice and skip all those commercials. 

By the end of the first week of the Games the NBCOlympics web site had more than 167 million page views, 22 million than for all of the Salt Lake City Games four years earlier. NBC needs to do some real research to learn why. Obviously the very fact the network streamed the complete runs and routines for top finishers and for all US participants means that Olympics web video came of age. It is doubtful it mattered that the video was delayed until after the terrestrial broadcast. Once it was available users could get what they wanted when they wanted. They never had the option of seeing it live so a few hours delay on the web meant nothing.

This wasn’t possible to such an extent before because of the way the International Olympic Committee (IOC) sells rights to the games – by geography.  By its very title the World Wide Web and the IOC’s geography philosophy clashed, and it was not until this year that the technology had reached the level that such large numbers of incoming addresses could be identified instantly by city and/or country of origin and in the NBC case if it was not an American address then the video access was denied.

But NBC officials believe if people are at home at night during primetime they will turn on the TV rather than watch the Games on the Internet. Maybe, but this year’s ratings for other networks indicate that unless there are some real winners to be seen in the Olympics coverage then regular network programming can take precedence over the Olympics, and people will look later on the Internet for just those events they are most interested in.

Just as newspapers are learning how to seek convergence with their web sites, so NBC must look at that, too. It knows now it has the technology to keep Internet video viewership just to US addresses, the question is how on a marketing level can it increase the usual $70 million in profits the Games bring in from television alone with the bulk from the prime time delay.

 

 

 

Bode Miller upset about dismal NBC ratings?

Another point NBC will want to study is the huge success of those sports it did show live on CNBC and MSNBC. Even curling, not exactly considered a prime sport, brought in numbers for its live cable showing that at times were triple normal programming. That indicates there really is a market in the US for live Olympics coverage – just as the rest of the world gets to see it – but again the network needs to really look at the multiplicity of delivery venues it has open – the terrestrial network, the three cables stations, the web and mobile. There’s a win-win in there – people can see events live, those who can’t see them live will watch the tape –delayed prime-time or the web and that entire package should bring in more than what the network earns now.

Can’t you just see the fortune to be made at 99 cents a pop of Bode Miller racing downhill on one ski, cutting trough the woods and straight to the parking lot without passing Go? Or Jacobellis doing her thing and skidding across the finish line after the past few meters on her bum, or a dazzling performance by an American skater?

The rest of the world doesn’t pay anywhere near the money NBC does for its Olympic rights so the world doesn’t have to try and recoup as much expense as NBC, but having said that this year’s viewership numbers, plus the success of the web site, should be a heads-up to NBC that there may be more lucrative ways of earning money besides relying primarily on prime time tape delay.

For the rest of the world the Games have apparently been a huge ratings success. Seems most of Austria watched the Austrian ski team do its thing; in the UK the BBC has been getting about a 16 share although on peak events involving the Brits it peaked at 22%.

Prime-time tape delay can still bring in the audiences – witness the 27.5 million who were looking for Sasha Cohen to win Gold, but saw her fall twice within the first 45 seconds before coming back with a dazzling performance to earn Silver in the women’s figure skating. If one had visited the NBC web site three hours before the telecast one could have read how she fell on her first triple lutz, so was this type of viewership because people wanted to watch Sasha anyway, or because women’s figure skating is so popular and graceful to watch that people just plain wanted to see it anyway.  It’s that type of questions that NBC will want to get answers on.

But already there are indications that NBC does understand that times are changing. The New York Times quotes Randy Falco, president of NBC Universal Televsion, saying, “We have to realize that the Olympic Games are no longer solely the domain of television and that in the future we are more likely to focus on being a content provider.”

As someone said some time ago, “Content is King.”

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NBC Loses Big Money on The Torino Games, But Then Again, Maybe Not - April 18, 2006

After all the NBC spin that it really did well on the Torino Olympics in spite of some American star athletes doing poorly and other networks programming first-run shows against it, the truth finally wins out in the quarterly financial report – the network lost about $70 million on the Winter Olympics. But the spin continues and the network says that affiliate contributions will make the Olympics “slightly profitable.”

GE CEO Jeff Immelt said the Games generated $684 million for the network – well short of the predicted $750 million.

GE’s NBC-Universal unit had a pretty dismal first quarter that the Games did not help with profits down 8% to $654 million. The network remains in fourth place and the 18 – 49 demographics has dropped another 8% this season.

NBC Says Only 45% of Its Olympics Revenue Comes From Prime-Time Tape Delay – March 1, 2006

Even though NBC failed to win the February sweeps in the key adults 18-49 demographics – something that in past Olympics years was was considered a de facto win -- it still insists viewership was just dandy and it looks to make similar profits as with recent Olympics – between $60 million-$70 million when all is said and done.

And in stressing there is less reliance on prime-time tape delay, Randy Falco, NBC Universal president, says it now accounts for just 45% of the Olympics revenue because of revenues from MSNBC, CNBC, Bravo, and the USA Networks that were all carrying Olympic coverage, much of it live.

And as predicted, NBC is hyping the numbers its way to put as positive a spin as it can by including the audiences for all those various cable outlets and claiming 184 million viewers overall, its third highest Winter Olympics behind Salt Lake City in 2002 and Lillehammer in 1994. Of course, in those years it was prime-time tape delay on the terrestrial network and that was it!

Nielsen Media Research puts it in true perspective. NBC averaged 20.2 million viewers nightly for its tape-delayed prime-time broadcasts, giving a household rating of 12.2 (just within its parameters for not having to provide advertising make-goods) and those numbers are the smallest percentage of US homes to watch any Olympics – summer or winter -- in at least 38 years.

In comparison, Salt Lake City – with NBC enjoying a home-court advantage and able to show many events live at night -- averaged a 19.2 household rating.

With prime-time, no longer accounting for the majority of its Olympics revenue, and with the huge success streaming delayed video on its Olympics web site, it doesn’t take rocket science to figure out from where the next large revenue stream for live coverage should emanate.

Shades of CNN’s Pipeline on the Olympics horizon?