NBC's Olympics Web Strategy Came Out a Loser

Despite its special Silverlight-powered Website and more than 2,000 hours of online video, it looks like NBC flubbed its opportunity to make its Olympics Web revenues more than a rounding error. NBCOlympics.com may have streamed 72 million videos and racked up 1.2 billion pageviews, but Yahoo Sports still edged it out with an average of 4.7 million visitors a day versus 4.3 million (source: Nieisen Online). And Yahoo didn’t even have video. NBC is spinning its numbers as a success to the New York Times today, in response an estimate eMarketer put out on Friday that NBC’s Olympics video ad revenues came to only $5.75 million. That compares to $23 million that CBS made from video ads when it streamed the NCAA basketball tournament live on its Website in March.

Surely, NBC should have been able to make more money from Olympics Web video than CBS did from March Madness. But NBC decided to limit what people could see online, especially live streams, in favor of its TV coverage because it feared cannibalizing its TV audience. Those fears proved to be unfounded because given the choice, most people would rather watch the Olympics on TV than online. But NBC missed a big opportunity here to expand its audience by streaming events it gave short shrift on TV (i.e., anything that wasn’t women’s beach volleyball or sports where the U.S. didn’t have a good chance of earning a medal).

The eMarketer estimate does not include banner-ad revenue generated by those 1.2 billion pageviews. Those could have been more than the video-ad revenue, depending on the CPMs—for instance a $10 CPM would have generated $12 million. It’s still a rounding error compared to the $1 billion in revenues that NBC made from the Olympics, most of that from TV ads. Right?

Wrong. NBC paid $900 million for exclusive video rights to the Olympics, meaning that its profits will be about $100 million. It doesn’t take much to move that profit needle. After Website and bandwidth costs, online revenues are pretty much gravy. Think of it this way: Every $25 million above costs would have resulted in 25 percent more profits.

But NBC still thinks of the Web as nothing more than an experiment.

Original post

Comments

[Gaucho420:]

March Madness is live on US TV and it is an office sport to follow it from work. The olympics, where most of the events were not live and in the middle of the night, are not what march madness is to US households. So no, I think its false analysis to think that the olympics would somehow trump march madness internet use in the US. I would for sure think CBS would pull in more ad revenue, that should be basic.

That's simply called not knowing the public and how each individidual sports is viewed. I watched these olympics on TV as the web (given all the results posted) would just ruin your experience...and the few times I did check the net, it did ruin it for me as I knew the winners and loser prior to them being shown at night on TV.

Not only that, NBC had so many channels with olympic covergae...why watch these sports on the web, with bad connections, no HD and tiny screens? You thinkn Americans wait every four years to see these sports on a tiny tube? I love the web...but not for sports (outside of results) for exactly the reason that monitors are tiny and not well suited for sports. And I have a 22 inch monitor, but still...rather watch it on TV

March Madness also benefits greatly from office pools...everyplace I've ever worked has ton of people who never wach one second of the games on TV checking the web constantly for results...just to see where they are in the office pool.

So that's a poor comparison as NCAA basketball as developed into something more than just sports fans watch, but something the office world in the US does to pass the time. The olympics, once every four years...will never reach that level and I am surprised a column like this one was written.

I thought it was obvoius, I know my own habits...the olympics on the webt isn't happening, its still better on TV and there's nothing NBC could've done to change that short of coming into my house and hooking up the web on my 60 inch TV

Poor anylisis in my opinion...no amount of live streaming or anything else would've changed my viewing habit. Olympics are meant for the big screen and without the need to check your stat sheet to see if your winning an office pool, there's not much reason to check the net for the olympics. And if I did, yeah...I got to what I know which is Yahoo!. No matter what network you put in for the olympics, I would still revert back to what I know on the web, which is Yahoo! or Google.

2008 Aug 25 01:03 PM

[Desi:]

Hello,

I agree with the author on the overall usefulness of the NBCOlympics.com website. There were two occasions when I tried to use the website to watch the two world events, Usain Bolts 100m world record and Michael Phelps gold medal # 8. I thought such world events would be readily available on the NBC website but after trying multiple searches and clicking on multiple web-pages I didnt find anything and I had to leave the website and wait to watch the short video on the NBC nightly news. I fully accept the fact that may be I fumbled during the online search or just not savvy to find the the clips on the NBC website.

What I do think that NBC did loose an opportunity to increase traffic to its web-site and in turn open up an additional channel for revenue making. I know for sure I would never use the NBC website for anything in near future as Olympics was the only reason I watched NBC or went to the NBC website. I guess by making the Olympic coverage available both on TV and Internet, NBC had an opportunity to generate a goodwill with the internet community and make money through the TV advertisements. Its very difficult to value goodwill but in difficult times thats what comes handy. I am not sure on the future of NBC Universal whether GE will keep it, spun it or sell it but I dont think the Olympic coverage will sway that decision in any direction.

Thanks !

Desi

2008 Aug 25 06:24 PM

[Scott Berry:]

My biggest complaint was that the website had extremely poor usability. It wasn't just the lack of video. It often took me multiple searches down blind alleys and nearly random clicking just to figure out a clip wasn't there in the first place. Not to mention how noisy the page impressions were. Yecch.

I will say that Silverlight worked very well for me (once I gave up on trying to bypass it and just gave in). The picture was crystal clear with no stuttering.

2008 Aug 26 10:43 AM