NBC's Olympics TV Strategy Pays Off Online
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After paying $900 million for broadcast rights to this year's Summer Games, NBC Universal executives are determined to protect the television business by drawing viewers to NBC and cable networks like USA.
At the same time, they are also resolved to build an online audience through the NBCOlympics.com Web site, with the aim of drawing in more Internet advertising revenue for future events based on the success of this one.
It's a delicate balancing act: Concentrate too much on TV broadcasting, and risk missing the boat on the next generation of Olympic fans online. Or put too much content on the Web, and there's a chance some viewers will ignore coverage on TV, where advertisers have paid NBC top dollar for commercial time.
"I think this is really about tapping into both online and offline," said Bob Jeffrey, chief executive of advertising agency JWT, a unit of WPP Group. "I think that's also a big part of what marketers want to do."
NBC Universal has posted strong numbers so far for both its TV broadcasts and online coverage. Nearly 25 million people have visited NBCOlympics.com, viewing 456 million pages and watching close to 22 million video clips, NBC said on Thursday, recording more page views than for the entire 2004 Games in Athens. Meanwhile, U.S. TV ratings are running second only to the 2000 Games in Atlanta.
Audience numbers could shift next week, when interest in the prime-time TV broadcasts face a challenge without swimming sensation Michael Phelps. But that is less of an issue for NBCOlympics.com since it attracts most of its audience during the workday rather than in the evening.
The site carries results, highlights, analysis, statistics and replays of events -- all of which is free though users must download Microsoft's Silverlight software and enter some basic information like a zip code.
NBCOlympics.com offers about 2,200 hours of live event competition from about 25 different sports, compared with just two hours of live footage at the last Winter Games in Torino.
"They absolutely want to protect that TV audience, but you've got to give them credit because they are streaming a ton of stuff online," said Michael Shields, a senior editor at Mediaweek.
Reviews of the NBC site have been largely positive though some have complained that it was difficult to sort through that much content, while others have noted the quality of the online video still does not compare to TV.
"Pumping the video quality up to Olympic levels is a hurdle NBC can and surely will work to overcome in time for the next Olympics two years from now," wrote Steve Johnson, the Chicago Tribune's Internet critic.
[cob:Special_Report]With a relatively small margin between advertising revenues and broadcasting costs, NBC Universal's Olympics will have little effect on the bottom line of its owner, General Electric Co, but they have strategic value as NBC promotes its TV shows and builds an audience for future advertising deals.
NBC Universal's efforts could set the tone for how future sports or entertainment events are covered on the Internet, easing concerns that the Web would eat into TV ratings. The result could be more advertising deals that incorporate both broadcast and online elements.
"It's redefining how we look at video coverage online," said Domenic Venuto, vice president of media and entertainment at Microsoft's Avenue A/Razorfish, a digital advertising and services agency.
"But if NBC had failed, it could have set the industry back years."