Olympics are expected to bring ratings gold to NBC despite problems in Rio
From fecal matter in the water to Zika-virus-carrying mosquitoes in the air, it’s been one negative headline after another coming out of Rio de Janeiro in the months leading up to the Summer Olympic Games that start Friday.
But NBC has no reason to believe any unpleasantness in Brazil will discourage viewers in the U.S. from watching the action in the comfort of their homes or on their mobile devices.
Last week, NBCUniversal President and CEO Steve Burke shared research data with executives at the company showing that consumers have a higher awareness of the upcoming Games than they did for London in 2012 or Beijing in 2008. The “intent to view†among those consumers surveyed is also well above the previous two Games.
The anticipated interest has been backed up by strong ad sales for the Games. Burke told Wall Street analysts last month that NBCUniversal’s profit on this year’s games will be well above the $120 million earned from London four years ago, when the network took in $1 billion in ad revenue.
The company reached its budgeted goal in sales for Games in Rio three weeks ago. Typically that doesn’t happen until the very start of the games. As of mid-July, ad sales approached $1.2 billion and they will continue right through the Games as long as there are commercials available.
The strong signs have led Burke to predict that the Games in Rio will be the “most profitable Olympics ever.†In 2011, NBCUniversal paid $4.38 billion for the broadcast rights to four Olympics games and three years later extended its deal with the International Olympic Committee through 2032 for an additional $7.75 billion.
NBC is feeling confident about the ratings because of one word viewers will hear a lot of over the 2 ½ weeks of competition: live. Viewers will see action as it happens in prime time, thanks to Rio being one hour ahead of the Eastern Time zone. Much of NBC’s coverage in London was on tape delay, causing many viewers to complain on social media (where competition-results spoilers were immediately available).
“Live sports is a gold mine in terms of offering Olympic coverage,†said Lee Berke, president of LHB Sports, Entertainment and Media. “When everything is packaged or taped it can be an issue. In this case it’s the time zones lining up and you’ll have a substantial number of live events in prime time that’s going to drive their ratings.â€
Advertisers who buy time on NBC’s prime-time coverage are being guaranteed a household rating in the high teens, slightly above the threshold it set in London. The 2012 Games averaged a 17.5 household rating. A rating point represents 1% of the nation’s TV households, currently equal to 1.164 million homes, according to Nielsen.
NBCUniversal holds back some ad time so that it can make good to sponsors “if there were a disaster in terms of ratings delivery, which we don’t anticipate,†Burke said.
The problems facing Rio may actually add to the drama and pique viewer interest.
“Barring anything major, NBC should be in good shape,†LHB’s Berke said regarding the ratings.
Seth Winter, who oversees advertising sales for the NBC Sports Group, said companies signing on for the Olympics are willing to take on the risk that comes with the event to be a part of the few television spectacles that can deliver massive ratings.
“Clients recognize that with all the turbulence that may exist in any host city the Games will go on,†Winter said. “There are unique circumstances in every Olympics so this is no different than every other one.â€
NBC’s Olympics programming has been helped by overall strong demand for TV commercial time. While digital advertising has grown rapidly, companies still depend on TV to reach a wide swath of consumers quickly.
There is also the ongoing shift in viewing habits in which sitcoms, dramas and movies can be accessed anytime through online streaming and video on demand services. To experience the emotional jolt provided by sports, viewers still have to show up to watch them live, where they will see the commercials. A live Olympics will provide that for 17 nights.
A study from research firm GfK shows that the Olympics viewer is more upscale than the typical U.S. consumer. Among those who told GfK they plan to watch the Games, 28% are more likely to have an average household income of $200,000 or more.
GfK found that only 1.6% of U.S. adults watched the 2012 Summer Olympics on a streaming device. The figure is expected to be up dramatically this year, the company said, as video streaming has grown exponentially in the last four years. NBC streams every Games competition live.
But NBC is making a concerted effort to target mobile viewers — who are younger than the TV audience — by presenting Olympics-related content produced by BuzzFeed on the social media site Snapchat.
Twitter: @SteveBattaglio
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