The Olympics are one of those things that only TV networks can do…
or is it?
In a world of broadband, as opposed to broadcasting, how might the Olympics be ‘broadcast’?
The way NBC is doing it this year is the old model. They paid $894 million for the US rights to the games. They have already sold $1 billion worth of advertising, so they are already in profit. And they will both air and present online nearly 3,600 hours of material to an audience of 35 million viewers. The numbers are staggering. But it is the purview of a network? And does this model work in a world of broadband?
NBC used to have a sort of monopoly over getting material into people’s homes. It has a broadcast frequency. No one else had it. NBC was a pipeline; and exclusive pipeline.
The model was fairly simple. NBC got into people’s homes when no one else could. They bought content in an open market, whether that content was The Olympics or Friends, and then it leased out 30-second swaths of that content to manufacturers who wanted to get their product into those same homes. Nike, for example, bought those 30-second swaths and then NBC took the Nike money and bought the Olympics… or ER, or anything else.
It worked well, but it worked because NBC had a monopoly. There was no way Nike could deliver their message to 30 million homes.
The web carrying video has pretty much wiped out the technological pipeline monopoly that NBC once posessed.
Of course, as with all technological changes, it takes time for the reality of the new technology to sink in.
But as this is Olympics week, let’s take a moment to play with an idea.
We all know that in the world of Tivo and broadband and Youtube, linear commercials are less and less watched, so already the model is a bit shaky. But let’s take it one step further (or 3 or 4).
Suppose Nike were to make the bold and ballsy step of buying the rights to the 2012 Olympics.
They could certainly afford it.
Now, once Nike held all the rights to the 2012 London Olympics, the ONLY place that 35 million people could see the Olympics would be at Nike.com
The only place.
No need for commercials.
The whole thing is one massive commercial. You could play the video in the center of the screen and have click and buy stuff all over the margins – for all 3600 hours. Here’s some back of the envelope calculations.
3600 hours of programming = 216,000 minutes of airtime. If you pay $894 million for all the rights all the time, the cost per minute is $4138, or about $2,000 per 30-second swath. Far far less than NBC is charging. And you get into 35 million homes. Which makes the CPM…. oh, very reasonable indeed, even for broadband.
But of course, this model is nonsense… or is it?
Many years ago, my very first business partner was a genius named Jan Stenbeck. (See photo)
He was the 2nd wealthiest man in Scandinavia, and he wanted to be first. So he got into the commercial TV business.
Commercial TV was illegal in Sweden, so he got his sister, a member of Parliament, to write a law allowing commercial satellite TV. Then he invested in and bought some transponders on the first Astra Satellite. THen he built a TV studio for Swedish TV in London and imported a whole Swedish speaking staff. Then he got his signal up for TV3, the first commercial TV network in Scandinavia. And of course, he bought programming and created news programming (VJs of course) and bought movies.
But in order to see TV3 you had to have a dish, and no one in Scandinavia was buying the dishes. They didn’t care. They were happy with the free State run TV they had known all their lives.
But Stenbeck was bold.
In 1989, he bought the rights to Ice Hockey for TV3.
This was like buying the rights to the World Series and the Superbowl and maybe NASCAR, all at once.
Sweden and Norway and Denmark were absolutely shocked.
But Stenbeck simply said, ‘if you want to see Ice Hockey, you better buy a dish and screw it onto your roof”.
And people did.
By the millions.
And viewership (and commercial dollars) followed the new technology…which followed sports.
I think of this as I sit in Italy watching the Olympics on German TV.
Sometime, in the not too distant future, someone is going to do the same thing.
And then, we’ll all get used to watching The Olympics on Nike.com
or ER on Pfizer.com