An Olympic-sized Challenge: The Future Of The Olympic Content Model

Olympic fever has gripped… well, a few of us, anyway. NBC’s television ratings for the Olympics are down about 15.5% from 2012 in London. NBC is averaging about 27.9 million viewers per night for the Rio games, as compared to an average of more than 34 .2 million per night for the Beijing games.

There are a number of reasons NBC cites for this drop, some of which are quite valid. Among the most prominent: Viewing habits have changed — people aren’t just accessing Olympic events across all of Comcast NBC Universal’s cable networks, but importantly, they’re streaming events live online rather than waiting for primetime coverage or needing to be in front of a television. This is certainly no surprise; it reflects the same shifts in viewing habits that have impacted entertainment and informational content consumption across the board.

Where this might be truly impactful: advertising. Advertisers spent $1.2 billion on television advertising for the Rio games. With ratings being down — and down 30% amongst the coveted 18-34 demographic — NBC may find it difficult to incite similar levels of spending for the 2020 Games in Tokyo, much less the 2018 Winter Olympics in South Korea. With the half-a-day time delays in the US from Asian host sites, we can anticipate that livestreaming will be the even more greatly preferred viewing option for more of those watching those Olympics — especially as Millennials and Generation Z become an even bigger part of the viewing demographic. What will this do to advertising rates for television networks?

Perhaps even more interestingly and importantly, will the IOC respond effectively to these shifts, embrace the new viewing patterns, or innovate new models for either distributing Olympic content or monetizing their product? Given the IOC’s clumsy handling of social media for the 2016 Games, that seems unfortunately unlikely.

Sponsorship and advertising revenue is more critical than ever to the successful execution of an Olympic Games. Recognizing that the citizens of so many potential candidate host cities, much less city and national governments, are increasingly skeptical or resistant to taking on any of the costs associated with the Games (looking at Oslo, Hamburg, Boston, Rome, not to mention others), it seems vital that the IOC figure this all out, and soon. Only two cities even bothered to bid for the 2022 Winter Games, with the costs of hosting cited as a major factor in the dearth of cities that opted to formally submit.

This isn’t just about the host cities and their costs. Look at what TIME reported about the revenue model for TV and sponsorship funds:

IOC bosses also set the standards for who makes what from the Olympics. “If you look at the 1980s, TV rights were auctioned by the local host, which kept 90% of the revenues,” says Solberg. “Now 68% of sponsorships and TV revenues are kept by the IOC.”

Let’s set aside for the purposes of this discussion any concerns about the IOC’s extravagance or lack of transparency, and just look at the revenue implications for the IOC. More than two thirds of sponsorship and TV rights revenue goes to the IOC. If shifts in consumption habits, disillusionment with the Olympics in general, or other factors that have combined to diminish the television ratings mean that networks won’t be able to charge as much for advertising during the Games, networks may begin to reconsider how much they’re willing to spend on those broadcast rights. And with the Olympics already hampered by cost concerns, diminished revenue for the IOC is the problem they need least in this environment.

Winter Games generally don’t get the same ratings as the Summer Games, at least in the US; summer sports are more generally popular to the casual fan. So the ratings for the 2018 Winter Games in PyeongChang will almost certainly be lower than even the Rio ratings. It’s self-evident, but the 2020 Tokyo Games may well be the most significant media and marketing situation in Olympic history — but the IOC may not have the luxury of waiting until 2020 to properly adjust to the landscape shifts. Sure, the rights for 2018 and 2020 have already been sold, and the IOC already has commitments for that revenue. But by the time 2018 and 2020 roll around, the consumption landscape might have shifted so dramatically and permanently that if the IOC hasn’t changed its model by then, their ability to elicit huge bids for future Games could be impacted.

Were I advising the IOC  (I am not) or even a network with broadcast rights to the Games, I’d suggest the following adjustments:

* Starting in 2018, livestreaming is your go-to, top option for broadcasting Olympic events. True, the Olympics are more than just the United States. But with PyeongChang being 13 hours ahead of New York, 16 hours ahead of Los Angeles, 8 hours ahead of London, and 7 hours ahead of most of Europe, it is safe to say that the bulk of the viewing audience will not be watching events live — and by the time TV prime time rolls around, the day’s results will be well known to all.People with a vested rooting interest in watching events — say, a hockey game between the US and Canada — will want to see it streaming live rather than knowing the result but having to wait more than half a day to see the actual event. In 2020, Tokyo is in the same time zone as PyeongChang and has similar challenges to reach Western viewing audiences. In 2022, Beijing will only be one hour ahead of PyeongChang and Tokyo, with a 7 hour difference to London, 12 hours to New York, etc.. And by 2024, the broadcast landscape will likely have altered so drastically and streaming become so commonplace that if you haven’t shifted by then, your events almost won’t be broadcast-relevant anymore.

So I would focus Olympic broadcast efforts on livestreaming from here on out. Beginning in 2018, the bulk of Olympic broadcasting efforts should be focused on livestreams available via mobile devices and laptops. The IOC should issue guidance or ‘helpful suggestions’ to all of its country-specific broadcast partners that more focus should be placed on livestreaming. (Yes, you could look at this as strong-arming, but it would also be a self-preservation move by the IOC that would eventually benefit the networks as well.)

Were I with the IOC, I’d bulk up infrastructure at the host site, invest in streaming technologies, and spend lots of money promoting the capability of watching events live via stream. Don’t worry so much about the television broadcasts; put the top events on during “prime time” in the host market to maximize attendance, interest, and viewing locally, and then make the events available online. In 2018 this might feel a little radical to the IOC, flipping the model on its head and making television second fiddle to streaming. But by 2024 when the Games are back in a Western-friendly time zone (the remaining candidate cities are Paris, Budapest, and Los Angeles), this will not be ‘radical,’ it will be the norm. Better to start now and ride the wave as it happens rather than desperately trying to catch up after it’s passed.

* Content Note to NBC: your over-air prime time broadcasts in 2018 should be designed to generate interest in the next day’s events and getting people to tune in to the livestream or online video of the events, rather than trying to draw people to watch events in primetime on tape delay. People will have known the results of an event for a minimum of about 8 hours by the time your primetime show comes on; if your strategy is built around drawing viewers to events in primetime, your strategy is designed to fail. (Yes, this means that you’re going to have to get creative and innovative about monetizing and advertising during streaming, but that should be a challenge you welcome anyway, given how important that’s going to be to your overall revenue in the future.)

If I were NBC, I’d use my 2018 primetime broadcasts for the packaged content that promotes the “stories” they so controversially stated were the interest of the casual fan in the US. I don’t agree that women or casual fans are more interested in characters in a sporting soap opera than the competition itself; I think even casual fans watch sporting events to see who will win. But I’ll readily concede that knowing the backstory on an athlete or event can fill out a viewer’s understanding of an event (imagine what a better understanding of the rules of water polo, biathlon, the scoring in the decathlon, what to look for in equestrian events, or shot put might do for interest in streaming those events), and can lead one to cheer for or against a particular athlete. So package up those features, use your primetime platform to show them and drive that interest, show some event highlights in prime time to sate the appetites of anyone over the age of 50 who hasn’t figured out the whole streaming thing, and spend lots of money to drive people to your streaming site.

This might rattle people a little in 2018, but by 2020 it’s pretty much going to be the way the majority of the people who care about the Olympics watch them. Lead or die. Start moving us in that direction, NBC. If you don’t lead the way, someone else will.

* IOCStart looking at different “broadcast” partners. In the United States, NBC has the Olympic rights locked up through 2032 (a risky proposition on their part that shows confidence that they’ll be able to anticipate and adjust for consumption habit shifts adroitly enough not only for the immediate future but out for the next decade and a half). But if I were the IOC, I might be looking to strike a global content distribution deal not through the BBC or Doordarshan or TEN Sports or RAI or Canal+ or CBC.. but with Facebook? Wouldn’t it shuffle the content distribution and consumption deck if Facebook Live were an officially sanctioned content provider of Olympic events?

Facebook might find it appealing to advance adoption of Live in the States, Canada, and Europe, and to use the Olympics as a fulcrum for its efforts to expand and become the de facto Internet in much of the developing world.  The IOC would solve for time zone differences and shifting consumption patterns by shifting to a streaming model. And advertisers might well be keen to participate because they would be able to work with Facebook directly — for a high profile opportunity that Facebook would likely spend billions on getting “right” — on developing advertising models that actually work for Live streamed content. This might be something that all involved would be interested in making work.

In the US, with NBC and other networks having investments and content agreements with Hulu, Hulu might be a natural partner or home for Olympic streaming. I could also see Netflix bidding large to disrupt things and use the Olympics as an entry point for winning the minds and wallets of US viewers who haven’t yet adopted streaming. But regardless of who the partner is, I will not be surprised in the slightest if the next entity to win US broadcast rights for the Olympic Games is not NBC, ABC, CBS or Fox, but Facebook, Hulu, Amazon, YouTube, or Netflix.

Which brings up another idea: Who says that the traditional networks have a monopoly on the voices that people want to hear regarding the drama of sport and athletic competition? I’m not saying this is a great example — because it’s not; it’s intended to be purely demonstrative — but why wouldn’t someone want to see a digital influencer like PewDiePie broadcast something like water polo?  There are lots of examples of people who have built up significant followings online that have translates to significant ad revenue for them, and who have more impact on Gen Z in particular than Bob Costas, Rowdy Gaines, Nastia Liukin, or Mike Tirico. Some of them, admittedly, lack the maturity or self-restraint to be entrusted with something like the Olympics — but some have it. Some digital video influencers would take that kind of an assignment quite seriously and recognize it for the huge opportunity it would be to grow followings, increase mainstream exposure, and generate future advertising revenue. It might be a little “out there,” but the IOC might be able to reach younger fans in North America, Western Europe, and Oceania by working with influencers from YouTube, Facebook Live, Twitch, or other networks.

* IOC: Join the 21st century when it comes to distribution. I realize that the IOC, by trying to clamp down on the sharing of GIFs, Vines, memes, and other digital content types, is trying to protect not only its own intellectual property but the investments of their broadcast partners. The problem is that in doing so, they could not look more effectively like they were planning for the 1992 Games and not the 2016 Games. The content environment has changed. We tell businesses this all the time; the Olympics are not so unique as to be immune to or separate from these changes. Shareable content generates ongoing interest; it promotes a feeling of inclusion or emotional investment in a brand or property. Even the simple sharing of a GIF of the Michael Phelps face increases a user’s involvement in or interest in the Games and the swimming events in particular. (And, as evidenced by how frequently the Phelps Face was shared and played with, it’s pretty much impossible to restrict sharing of Olympic content anyway.)

phelps-face

Before the PyeongChang Games in 2018, the IOC needs to join the current times and embrace content sharing. This doesn’t just mean turning a reluctantly grumpy blind eye when someone online creates something visual using Olympic content — it means embracing it. The IOC and country Olympic bodies should be sharing user-generated content when it is good enough or funny enough; they should be providing video clips and images on their official sites and encouraging users to be creative with Olympic visual content. (Respectfully of course! We need only look to the unfortunate social media experience of Gabby Douglas during the Rio games to see how jerky the public can be toward athletes, so this could admittedly get dicey.) Producing six second clips that could be made into Vines or turned into animated GIFs by the creatively or humorously inclined in the Olympic audience would not just make the IOC look less stodgy, but would increase the amount of Olympic-related content being shared across social networks, generating interest in the games and potentially enticing someone to tune in to the broadcast or streamed events who might otherwise not have. Allowing fans to do limited livestreaming of their own from Olympic venues to share with only their friends might be a way to personalize the experience of attending an Olympic event. Whatever form it takes, it’s safe to say that the IOC needs to adjust its attitude toward digital content sharing and so-called “unauthorized” content sources before the 2018 Winter Games.

Regardless of which specific changes happen, I think it’s safe to say that major changes are coming — and that the 2016 Rio Olympics are the last ones that will be broadcast or distributed the way we’ve been accustomed to.

 

 

 

 

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