Rio Olympics 2016: NBC bets big on blockbuster
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2016-08-15 15:04:52
When Brazilian marathon runner Vanderlei de Lima lit the torch in Rio on Friday, it marked the latest chapter in NBC’s decades-long bet on the commercial success of the Olympic Games.The media group, which is owned by Comcast, paid $7.8bn to extend its deal to broadcast the Olympics until 2032, having started airing the games in 1964.
For television companies like NBC, keen to dismiss pessimism over their future, the stakes for blockbuster events such as the Olympics have scarcely been higher.As audiences scatter across a growing choice of screens and stream their favourite shows days or weeks after they air, live sports are viewed as a rare safe bet for traditional television. Steve Burke, NBC chief executive, predicted Rio would be the most profitable Olympics in history.
In comparison, yearly television advertising sales have grown less than 6 per cent since 2012, according to Nielsen.More than three-quarters of sales for Rio came from primetime television buys, which had “gone up a bit” versus London thanks to expectations for higher ratings, said Seth Winter, vice-president of ad sales at NBC.
“The value to ad buyers is much higher than it was four years ago,” says Bill Day of Frank N Magid associates, which consults to broadcasters. “It’s hard to find those massive bulks of consumers anywhere, let alone in a dedicated time-defined space. In 1978, a third of households tuned in to watch Bonanza each week.”NBC is set to air a whopping 6,700 hours of live coverage from Rio across 11 channels and dozens of live streams. It is the equivalent of watching every NFL game since 2008, according to Brian Roberts, Comcast chief executive. This is expected to lift viewership after much of the London coverage was broadcast on delayed tapes, prompting outcry from audiences when results emerged on social media first.
Television owners have had reason to be optimistic so far this summer. This year’s so-called upfronts, at which television networks lure a large chunk of advertising commitments from buyers, saw bookings rise across the large broadcasters — ABC, CBS, NBC and Fox — after three years of declines. Networks have also seen ratings inflated by coverage of the US presidential race.But the question looming over media owners is whether these larger audiences can be sustained once the fanfare has ended.
There is little sign that the cord-cutting trend is waning. In the second quarter of this year, some of the largest cable and satellite providers — Verizon, AT&T, Comcast and Dish — shed a combined 375,000 TV customers.Meanwhile, digital advertising is projected to outpace television advertising for the first time next year, as brands look to reach a younger generation that has eschewed cable boxes in favour of streaming video.
NBC has acknowledged the need to appeal to cord-cutters, even as it holds a tight grip over Olympics coverage. The network has for the first time allowed some social media companies, such as Snapchat and Facebook, rights to distribute highlights and clips of athlete interviews to drum up interest for the games.Meanwhile, Comcast is focused on capitalising on the Olympics frenzy to convince its customers of the value of their monthly cable TV bill.
The largest US cable-TV provider is pumping out Olympics coverage through its new high-tech cable box, called the X1 — a robot-esque TV guide that Comcast compares to Amazon’s digital assistant, Alexa. The X1 will provide “one integrated Olympics dashboard”, through which viewers can speak commands into a remote to search between live cable programmes, digitally streamed highlight reels and videos, and real-time scoreboards. The box has been rolled out to about 40 per cent of Comcast’s 22m video subscribers.
Comcast’s chief has called the X1’s Olympics platform a “laboratory” for the “future of television”. The 53-year-old company, which lost 4,000 TV customers last quarter, has placed a $7.8bn gamble that he will be proven right.