NBC’s US$12B bet on Olympics stumbles
Fans are aging; young move to Snapchat
Back in June, Steve Burke described what he called his Olympics “nightmare.”
“We wake up someday and the ratings are down 20 per cent,” the chief executive of Nbc universal said at a conference. “If that happens, my prediction would be that millennials had been in a Facebook bubble or a Snapchat bubble and the Olympics have come, and they didn’t know it.”
He has escaped that with the Rio Games this year — but not by much. Prime-time broadcast viewership has been down about 17 per cent compared with the London games four years ago. And in the 18- to- 49- year- old age group coveted by advertisers, it’s been even worse. That audience has been 25 per cent smaller.
The Summer Olympics ratings slip, the first since 2000, raises fresh doubts about what used to be a sure thing: Live sports would be a huge and growing draw no matter what. That’s why NBC parent Comcast Corp. paid US$12 billion for exclusive U. S. broadcast rights to the Olympics through 2032. Others, including Walt Disney Co.’s ESPN, 21st Century Fox, Time Warner and CBS, have made long- term bets on football, baseball and basketball.
Canadian ratings, by contrast, are on track to exceed those for London in 2012. The Canadian Broadcasting Corp., which reportedly paid $ 90 million for both the Sochi and Rio games, said this week that about 30.4 million Canadians ( 86.3 per cent of the population) had watched its coverage across all networks and platforms during the first 10 days of the Rio games.
To be sure, many sporting events are as big as ever. The Super Bowl in February pulled in 112 million viewers, making it the third- mostwatched event in TV history. On the other hand, Vil- lanova’s victory over North Carolina in the men’s college basketball championship drew 37 per cent fewer viewers than last year’s title game, though that may have had something to do with the fact that, for the first time, the matchup was on a cable channel, not a broadcast network.
One issue is that many fans are getting older. The average age over the past decade of National Football League and Major League Baseball viewers has i ncreased by four and seven years, respectively, to 47 and 53, according to Ben Thompson, founder of the blog Stratechery.
“Sports is less ingrained in the younger demographic,” said Brandon Ross, an analyst at BTIG Research. “It has been replaced by other things like video games and e-sports and Snapchat feeds.”
And Americans have more entertainment choices. During the 2012 Olympics, Snapchat was in its infancy and Netflix had about half as many U.S. subscribers.
NBC Sports chairman Mark Lazarus said the net- work has a plan to profit from its Olympics investment by giving more options to viewers. This year, for example, the network put more than 6,000 hours of coverage online and allowed buzz feed to run its Olympics Snapchat channel.
Through Tuesday, NBC said, 78 million unique users streamed on the NBC Sports app and nbc olympics. com, up 24 per cent from same period in London.
The network is reaching more 18- to- 49- year- olds on non-TV platforms and dominating rivals in that group, Lazarus said. While about 98 per cent of Olympics watchers are still on traditional television, “We also understand that to millennials and younger viewers, prime time is really ‘my time.’ They want to watch on their terms, and that’s why moving forward we’ll continue to adapt to viewer behaviour with our coverage on multiple platforms.”
It’s a delicate balance: Online offerings may have cut into NBC’s Olympics audience on TV, John Martin, CEO of Time Warner’s Turner division, said in an interview.
“Potentially it’s diluted the concentration of viewership on the linear network,” Martin said. “I wonder if there was less content available — and people felt more compelled to tune in to the traditional network — whether that would bolster ratings.”
Lazarus agreed that might have been the case, but said if NBC hadn’t let people stream, “the press would be writing that we’re harbouring content and not just showing it live and not sharing it. It’s our job to find the right balance.”
NBC charged up to 50 per cent higher rates for Internet ads than for TV because the web audience trends younger and marketers are eager to reach millennials, Lazarus said, and there was little trouble selling spots on both platforms. NBC said its profit from the London games was about US$ 120 million, and that it sold more than US$ 1.2 billion in commercials this year and expects to have even bigger earnings than four years ago.
The Olympics continue to have that draw. The audience “is not as good as it was four years ago, but in such a fragmented media world, it’s such a huge number,” said Andy Donchin, chief domestic investment officer at ad buyer Amplify US. “We’re buying TV to get mass reach.”