How NBC Lost Millions of Dollars During The Rio Olympics
NBC announced during the Rio Olympics that ad sales had passed $1.2 billion dollars, which sounds pretty good, particularly since the Olympics weren’t over at the time. They’ve benefited from pre-Olympics coverage of Zika and Rio crime — which created free publicity — but also the coverage of the final Olympics for two living, thriving, and retiring legends: Michael Phelps and Usain Bolt. (And, yes, even Ryan Lochte’s embarrassments helped.) Even with all that, the Olympics still struggles to turn a profit.
Remember, the 2012 London Olympics generated $1.3 billion, with pre-Olympics estimates being that NBC would still lose over $200 million even before those games began. Eventually, depending on who you ask, the London Olympics either lost $223 million from the games or made $120 million.
Either way, NBC had been losing money for years from the Olympics, seeing the games as mostly a boon for all of NBC’s other media properties and programming. Thus, they spent $7.65 billion for the rights to the games through 2032 — an average of $1.275 billion for each games.
NBC’s television ratings were down from the London Olympics, overall, 18% to a 25 million viewer average. Amongst the coveted 18-to-49-year-old age group, that audience has decreased by 25%! While there’s been a huge decline in television viewers, the real shocking statistic is the amount of minutes that have been live streamed — surpassing 2 billion minutes (2.71 billion total)!
This has been a huge missed opportunity for the execs at NBC.
The problem is the emphasis on Sales to drive advertising dollars through a split, “television first” pitch, followed by native online ads or pre and mid-roll video ads. The model should’ve been completely flipped. NBC does have its hands tied with making money for its affiliates, but this is something they should’ve already figured out by now.
The trend of cross-platform viewing was apparent during the Sochi Olympics, when NBC saw an eightfold increase online. As we’ve seen from the newspaper industry, the media isn’t always the quickest to change their plodding ways. Saddled with execs who made their mark in a traditional format, and having not grown up with an ever-changing array of technology and apps, the networks will almost always be playing catch up.
Here’s what NBC should’ve done and should work to change between now and the South Korea 2018 Winter Olympics:
- Focus on short-form live feeds of key events and finals
- A study by Microsoft earlier this year, showed that humans now have an attention span of eight seconds — down from 12 seconds in 2000. That’s a shorter attention span than a Goldfish!
- With the amount of entertainment that is, literally, at our fingertips, a live stream ad of Bolt’s 100m final or any one of Phelp’s finals on my Facebook, Twitter, or YouTube feed, and I would’ve gladly clicked through and watched several pre-roll ads to get to this kind of live history. And it would all be over in seconds, freeing me continue chasing Pokemon.
- Eliminate the registration wall for short-form live content, where a user must enter their cable subscription credentials to view
- In 2014, 8.2% of pay TV subscribers cut the cord, with that number expected to grow by at least 1% each year.
- Some 19% of 18-to-29-year-olds have become cord cutters, while another whopping 16% have NEVER had a traditional subscription TV package. These trends will not be changing. Forcing a subscription wall is about as ill-advised as the newspaper industry’s similar plan of a decade ago
- Focus Ad Sales and Inventory on “Live Stream first”, with a premium placed on creating engaging, rotating ads for pre and mid-rolls
- With real-time sentiment coming from all major social platforms, immediate demand for short-form live content (say for instance, a Bolt or Phelps final) is something that statistics have yet to measure. My bet is that viewers with their shortened attention span will be willing to watch and engage with numerous ads to watch such a highly anticipated short-form event.
- Promote short-form live stream events on social platforms and search engine results, utilizing recent advancements of live stream digital ads (or live stream native ads)
- Recently, Bernie Sanders, GoDaddy, and hit game launches on Twitch have used this new technology to drive viewers back to their live stream.
- NBC can get creative with this format by having a split screen — one live — because showing athletes stretching before a 10 second event may not be the most compelling image. One image can be of previous highlights, while the other is live.
- NBC can also superimpose text, which is what many successful media companies have done to capture (and engage) views on social, without that user ever having to click on the audio icon.
Changes need to be made today, but we know that’s not how old media operates. They’ll have focus groups and studies, followed by several chains of meetings and decisions before anything is implemented. With the Games locked up exclusively to NBC for the American audience until 2032, they still has a fighting chance to turn things around — something many other media organizations in other industries did not have the luxury of…
As one of the most esteemed brands in broadcasting, NBC has an opportunity to lead, rather than play catch up. But they’d better hurry, otherwise millions more will be lost.