Olympic viewership takes a nosedive

AFTER committing to spend about US$12 billion for the rights to televise 10 Olympic Games through 2032, Comcast-owned NBCUniversal saw its viewership nosedive in Tokyo.

This year, the average prime time viewership each night across all NBC platforms — online, cable & network — was just 15,5 million people. That’s down from an average of 26,7 million viewers for the Rio Games in 2016 and represents a 42 percent decline.

In total, just 150 million Americans watched the Olympic games, compared with nearly 200 million that watched the 2016 games in Rio. That makes the lowest average primetime viewership for the Olympics on NBC since it began broadcasting the event more than 20 years ago.

NBC Olympic Average Prime Time Viewership

• 2016 Rio Games: 26,7 million viewers

• 2020 Tokyo Games: 15,5 million viewers (-42percent)

Total NBC Olympic Viewership

• 2016 Rio Games: 198 million Americans

• 2020 Tokyo Games: 150 million Americans (-24percent)

As a standard industry practice, NBC has already negotiated “make-good” deals with 99 percent of their ad-buyers, according to the Wall Street Journal. The general idea is that the network will offer up additional commercial time to marketers to make up for the shortfall between the audience NBC promised versus what their clients actually received.

Still, the network says that they brought in more than US$1,2 billion in advertising revenue and expect the Tokyo Games to be “very, very profitable for NBCUniversal.”

The decline in traditional cable television shouldn’t surprise anyone. We have known this for years. Incumbents like Disney and Comcast only started their streaming voyage after watching Netflix expand from a DVD mail-order business in 1998 to a streaming behemoth with 200 million subscribers today.

Traditionally, the thought process has long been that the only two things keeping major cable television networks in business were live sports and news, both of which are time-sensitive and decline in viewership value as you move further away from the event.

Services like Netflix, HBO, and Amazon Prime have paid big money to produce ancillary sports content like F1: Drive To Survive, The Last Dance, Hard Knocks, All or Nothing, and many others. But what happens when these major streaming services reach enough size and scale to competitively bid on the actual broadcasting rights themselves?

This has already started. For example, Amazon is spending US$10 billion over the next decade for exclusive rights to Thursday Night Football and another US$333 million per year on matches in French soccer’s topflight Ligue 1, while ESPN+ is in the middle of a 5-year, US$1.5 billion deal with the UFC.

But we are about to reach a tipping point. Despite having a 100 million household headstart, traditional pay-TV is expected to officially succumb to streaming by 2024 — 68 million households vs. 63 million — and research now indicates that more than 80 percent of US households now have at least one internet-connected TV device.

The bottom line: As the underlying value proposition continues to fundamentally shift, legacy customers are ditching cable TV while Gen Z consumers entering the market aren’t signing up for it in the first place.

Premium live sports rights are scarce. As digital players join the broadcast bidding party and traditional networks continue to increase offers & decrease margins to survive, the supply & demand equation is set to shift. Media rights will continue to rise over time, the decline in cable subscribers will accelerate, and asset-light professional sports leagues will make more money than ever before.

Again, this is well known. Legacy players like Disney, Comcast, HBO, and others have invested heavily in their subscription business and continue to intelligently place premium content behind a paywall to drive up subscriber count. Still, it’s going to be fascinating to see how it all plays out over the next 5-10 years.

Remember, as humans are handed more advanced technology than the generations before them, the rate of progress tends to accelerate faster than before. The battle between pay-TV and streaming will be no exception. -