NBC and the Olympics: What The Billion Dollar Lab Is Really Worth

Article ImageLive sports have long gotten the credit for keeping cable customers subscribing. With almost everything else streaming on websites such as Hulu, sporting events have often resisted the call of the web. That has been changing, little by little. Earlier this year, the Super Bowl was streamed live on the web, and now, NBC is upping its streaming game during the London 2012 Olympic Games. The network announced earlier this year that all 32 Olympic events will be streamed on NBCOlympics.com. While this is great news for cord-cutters and those looking to view their favorite events on their smartphones and tablets--and at work--NBC's decision does come with a few caveats.

Big rating events, such as Michael Phelps going for his 15th gold medal, will be streamed only after its prime-time debut. Still, the embrace of digital viewership will provide NBC and its advertisers with an unprecedented look at how a range of spectators are viewing the games.

For the 2008 Beijing Olympic Games, NBCUniversal, Inc. (NBCU) created what it called The Billion Dollar Lab. Of the 32 events covered, 25 were streamed in high definition and with multiple camera angles that spectators could control. For this year's games, NBCU will continue to provide the same great coverage, now with an almost 60% increase in streaming coverage, as well as providing content for smartphones, tablets, and other devices. According to Troy Dreier, senior associate editor of Streaming Media magazine, the games provide a great opportunity for innovation. "Companies who have the rights to [the Olympics] seem to challenge themselves to provide even more access, even more sports, even more camera angles. It does create a wonderful calling card to the online industry to see what it can do."

Calculating the number of unique viewers will be tricky since viewers will be using multiple devices. NBCU has teamed up with Google and comScore, Inc., a databased infrastructure service provider, to help accurately count viewers and to see where they're coming from.

Google and comScore will analyze "single source" consumption, unduplicated viewership patterns, across content shown through television broadcast, mobile devices, computers, and, for the first time ever, tablets. According to an NBCU February press release, "[T]he Google project will feature a panel of approximately 3,000 respondents who have agreed to participate. The project will also utilize a number of proprietary algorithms developed specifically for this project by Google."

And while consumer tracking isn't new, comScore's initiative will bring in data on a wide and diverse set of Olympic enthusiasts. "The comScore initiative will tap into the company's new 10,000 member single source TV/Online panel," announced NBC. "[Single source data is] considered the ‘holy grail' of media measurement."

These initiatives are great news for cord-cutters, who will now be able to see all 3,500 hours of Olympic coverage. And NBCU sees the value in developing its relationships with online-only consumers. Alan Wurtzel, president of research and media development for NBCU, said via press release, "Since we first began the Olympics Billion Dollar Lab, non-linear video consumption has increased dramatically." NBCU is reaching out to these consumers, hoping to ride the technology wave to increased ratings and revenue streams.

Right now, providers are looking for more ways to integrate and monetize multiscreen distribution. It is a race that few content providers know how to efficiently run. If The Billion Dollar Lab provides the detailed data it promises, it will prove to be a successful experiment. As of right now, online viewing is mostly seen as marketing. Last year's French Open semifinal between Roger Federer and Novak Djokovic was streamed live on the West Coast and then televised on tape delay. As a result, the West Coast ratings were higher than the East Coast numbers, where the match was broadcast live. NBCU will be looking at how to bring in significant revenue from both live streaming and prime-time broadcasts.

"It definitely does provide buzz to put something online," says Dreier. "Even more than that, it creates a bigger audience that will then tune in to the regular broadcast show." This is exactly what many content providers use online viewership for: buzz. Televised events are now discussed and debated in real time via social media.

For that reason, NBCU has been quick to realize the value of online viewers versus traditional broadcast viewers. "What you can do with real precise analytics online is so much greater than with TV advertising," says Dreier. The Olympics experiment is poised to provide advertisers with an unprecedented view of where best to spend their dollars. "I think it won't be long before ads for online viewing will charge more. Because they can tell who exactly is watching and they know something about that person and they can target the ad to the viewer in a way that TV will never be able to do."

NBCU's plan does not come without risk. The network provided live streaming for this year's Super Bowl, which drew in 2.1 million unique viewers. However, the game was plagued by what Kevin Monaghan, managing director of NBC Sports Digital Media, called "connection issues." This year's Olympic games are 17 days long, and 24-hour viewership is expected. Any failures will be discussed loudly and at length via social media.

Dreier says he doesn't expect that will happen. "We've seen great things with streaming from the previous Olympics. I believe they'll improve on the experience this time." A similar pattern was seen during this spring's March Madness NCAA tournament, where viewers watched live games on their smartphones and tablets during off-peak hours. NBC received rave reviews for the quality of support. "It's a great showcase, a great opportunity and they're pulling out all the stops to make it really good. I think people will be really happy with their online video experience."

Will NBCU's Billion Dollar Lab provide the missing key to monetizing online and platform content? Probably not. But NBCU's dedication to the experiment will provide them with data from a unique and vast viewing pool, the likes of which have never been seen before. Luckily for all content providers, NBCU, Google, and comScore have no intentions of keeping their findings under wrap. 

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With a global audience, not only of sports enthusiasts but family viewers as well, the Olympic Games are a potential goldmine for advertisers. But the Games starting in London offer greater opportunities than ever before, because these are the first ever to be streamed online in their entirety.