The Industry Will Be Better When We Work Together
In an earlier article, I proposed that although people were clearly consuming the 2016 Rio Olympics streaming from a variety of devices, it wasn’t “primetime” for online streaming; that there were still a host of challenges (quality, authentication, etc.) to overcome before we would ever see online take the place of broadcast.
But combine popularity with lots of challenges and you get one thing—opportunity.
Despite dogging some of the streaming quality, we can’t ignore the fact that the 2016 Rio Olympics were a watershed moment for the way people consume video content. First was the decline in television viewership. According to Dominic Patten at Deadline,
Fast affiliate ratings for NBC’s 8 – 10:30 PM coverage drew a slumping 4.7/20 rating among adults 18-49 and just 18.14 million total viewers. That’s down a hard 25% in the key demo and 24% in viewership from the early results of August 12 to hit an all-time low in both categories for the 2016 Games for the Comcast-owned net. In fact, last night’s low was down a whole point from the previous demo low of August 16.
Patten goes on to say,
…the final Friday of Rio 2016 declined 29% in the demo and had an audience drop of 19% from the comparable night of London 2012 – which was one of the lowest-rated nights of that Olympics four years ago.
Why would slumping television viewership signal a watershed moment for video consumption? Because, perhaps as a consequence, online streaming rose significantly. According to Lauren Goode and Sean O’Kane at The Verge,
NBC says there were 100 million unique users across all digital platforms, a 29 percent jump up from the 2012 Olympics, though those are all online visits and not specific to video streaming. Fifty million people watched the Olympics video online, up 109 percent from years prior, and the total number of live video minutes streamed (2.71 billion) more than doubled the number from all prior games combined. This year, 42 percent of streaming video was watched on connected TVs and dedicated OTT devices like Apple TV.
Together, these two stats demonstrate the generational and cultural shift we are seeing happen in the way we watch television.
But there are still significant challenges to overcome before online will truly overtake broadcast. One of which is the business of TV. As further indicated by Goode and O’Kane,
Just 10 percent of NBC’s ad revenue during the Olympics came from digital. “Our CPM online is higher than the TV CPM,” Lazarus said. “But it’s just scale. The TV audience is just so much bigger, and I believe that will be the case for a long time. And marketers pay for scale. So money is still attributable to television for the foreseeable future.”
Let that sink in for a second—TV viewership, which accounts for 90% of the advertising revenue was down, and streaming, which accounts for 10% of revenue, was up considerably. What’s more, online advertising is worth more (i.e., higher CPMs) than television.
This is screaming opportunity now.
Sure, not everyone is ready to make the switch from linear broadcast to online video, but there is no better time than now for content owners and distributors to draw people away from broadcast to streaming. Perhaps it’s a traditional broadcaster making an entire season sitcom available all at once (like Netflix or Amazon). Or, perhaps it’s a network operator making linear broadcast content available without need to authorize using a cable subscription. Whatever it is, now is the time to bring consumers to streaming. Clearly there is momentum after the 2016 Rio Olympics. If content owners and distributors want to capitalize on those higher CPMs, they must continue to push hard on streaming in order to move the needle on the transition. And that means now.
NBC clearly demonstrated with the Olympics streaming coverage that they could provide the operational, on-the-ground support needed for a high number of streams and concurrent users. So that’s not an issue. They also demonstrated that they could generate revenue from online distribution (even if it was eclipsed by what they generated through traditional means). So clearly the potential is there. Sure, online streaming quality could still be more consistent, but it’s just like the early days of rabbit-ears on the television set—the technology is still settling.
To be honest, there’s not really anything holding back the incumbent broadcasters like NBC from doubling-down on streaming.
I just hope that someone doesn’t put the iron in the water instead of taking the hammer to it first.