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NBC's Olympic Video Offering Doesn't Make It to the Medal Round

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European broadcasters moved into the age of live streaming video with the 2004 Summer Games, while NBC stayed behind.  Why did the Peacock network shortchange U.S. Internet users?

Just before the 2004 Olympics kicked off in Athens, someone working with NBCOlympics.com promised me "more video than you'll be able to stand watching on a desktop computer" -- even though NBC wouldn't be providing live streaming video.

How I wish that were true.

But for that to be the case I'd have to be in the United Kingdom, the Netherlands, or any of the other countries with Olympics broadcast rights holders willing to include broadband as a video partner instead of alternately treating it as a threat or a sideshow.

This should have been a breakout moment for streaming video. Instead, it's a breakdown as NBC and the International Olympic Committee trade the chance to expand their audience and interest in Olympic sports for security and a false sense of control.

The BBC and other broadcasters from the European Broadcasting Union are producing live coverage and on-demand video. Comparing the BBC to NBC isn't completely fair -- the BBC is supported by license fees and has a public mandate to serve "the interests of its viewers and listeners." NBC is commercial and is part of publicly-traded General Electric.

Worried about diluting the value of its broadcast rights, the IOC limits video and audio Internet access based on national boundaries. That's why expat Ian Thorpe fans can't listen to Australian reports of his wins and those of us in the U.S. can't watch or listen to the BBC's coverage online.

Granted, NBC is providing extensive video content online, including features, event highlights and athlete interviews. The site offers localized content organized by affiliate in a micro-site called the O-Zone, adding more video. But the network opted not to offer video-on-demand or live-event video, even though these were within its rights.

Asked about the decision, NBCOlympics.com executive producer Evan Silverman responded by e-mail from Athens: "NBC is providing the most comprehensive TV coverage of an Olympics in history. With 1,210 hours of programming across seven platforms (NBC, MSNBC, CNBC, USA, Telemundo, Bravo and HDTV), coverage averages more than 70 hours of programming in every 24-hour period during the 17 days of the Games. The NBC television networks remain the best places to watch the Games."
 
Faster, higher, stronger technology

In the years since IBM produced the official Olympics web site for the 1996 Summer Games in Atlanta, the consumer's ability to watch streaming video has been enhanced dramatically by the expansion of broadband access, higher-quality hardware (video monitors, video cards, more memory, faster processors) and more adept software.

Anyone who feels tortured watching streaming video online these days is either a) watching a bad production, b) using dial-up or c) still using Windows 98 on a Pentium II.

That doesn't make watching even a high-end desktop or wide-screen laptop the most enjoyable way of viewing a gold medal sprint.  But it may be the most convenient or, for some, the only way to watch certain events or shows.

On the business side, the digital rights management has become increasingly sophisticated, providing broadcasters and the IOC a level of security not previously available. True, technology also makes sharing digital media easier but, if my trolling across the Internet over the past few days is any indication, few consumers are willing to go through the technical hassle or take the legal risk of figuring out how to hack the streams from another country or upload video of TV broadcasts. They might download it if someone else puts it up but even that is iffy.

My first download using BitTorrent file sharing took several hours, 80 megs and turned out to be 8 minutes and 34 seconds of NBC HD audio coverage of the historic men's 200 freestyle race; apparently the video code got scrambled in the process. The three torrents of the BBC's broadcast of the Opening Ceremonies totaled 2,100 megs; part one took more than seven hours to download and I still couldn't watch the video on any of three viewers. Loved the sound of those British voices, though.

The media rights relay

Of course, it's easy for those of us outside the NBC Universal executive suite to argue that delivering a network experience on broadband is the best way to go. NBC pays the lion's share -- roughly $5.7 billion for exclusive rights from 2000-2012 -- and has the most to lose. 

This year, the network is making more use of those rights than ever before, spreading 1,200-plus hours of coverage across NBC, Spanish-language broadcast network Telemundo, cable networks CNBC, MSNBC, Bravo and USA, and NBC HD. Every hour of every day NBC is broadcasting the Olympics on at least one of the seven. It's not all unique -- NBC HD airs eight hours of delayed coverage in a thrice-daily loop -- and it's not always easy to find what you want when you want it, but it is a massive step in the right direction.

It is no small irony that a movement founded to bring countries together is splitting the Internet apart. It's also no surprise. The modern Olympics is a massive money machine and it got that way through manic media rights management. According to IOC figures, the $1.476 billion being paid for broadcast rights in 2004 is five times the $287 million paid for the 1984 Summer Games in Los Angeles. NBC alone makes up half of the 2004 broadcast revenues.

The sale of broadcast rights fuels the games and other Olympic-related activities. Some is used for transmitting the Games to areas that otherwise couldn't afford it. From 2004 forward, 49 percent of the revenue goes to putting on the Games while 51 percent supports the Olympic Movement worldwide.

In turn, the commercial networks rely on ratings-driven ads and sponsorships to cover their costs and make a profit.

(In a nice twist, the IOC also prides itself on selling "only to broadcasters that can guarantee the broadest free-to-air coverage throughout their respective territories. The Olympic Games are one of the only remaining major events in the world to maintain such a policy." I'd vote for selling to those who agree to make the most free coverage available to the most people in as many ways possible.)

The consumers run the last leg of the relay. If they don't watch, the ratings fall. And, at least for now, Internet ratings don't factor into the equation. A viewer watching an event on NBC or Bravo literally is worth more to the network than that same viewer watching the same production in streaming video.

That doesn't mean the Internet is a revenue-free zone for Olympics video. NBC and other networks have grown adept at including the Internet as part of a package sale.

Every video clip is bookended by variations or duplicates of commercials being shown on TV. And, based on personal experience, online viewers are more likely to actually register the commercial instead of using it as a break; the online commercial impression may, for now, be more valuable in that regard. 

While it's possible to watch streaming coverage of the entire BBC broadcast in Great Britain and other countries, the most valuable potential uses of online video are timeshifting for consumers, streaming live events being broadcast on a delay and allowing access to events not usually aired. Yes, the network may give up a little primetime viewership but advertisers shouldn't have to lose anything. And some people may make a point of tuning in later for a big-screen view or may spread the word for others to tune in.

Allowing access to events not usually aired or to full coverage of events that don't involve the U.S. team can be a major draw, particularly in a nation of immigrants not allowed access to Olympic video from their home country. The host broadcaster provides the video, in this case 3,000 hours of event coverage. NBC is offering 1,200 hours, which includes commercial time, leaving a substantial amount of video that could be used to create sport or country-themed packages that don't compete with primary coverage.  

Serving more video also would add to NBC's expenses, but that could be offset by advertising, sponsorships and other possible revenues. The network could make content deals with cable ISPs or other providers to stream coverage securely to their subscribers.

They could even -- no rotten eggs, please -- charge for certain kinds of packages: coverage that mimics over-the-air offerings would be free, as would some additional coverage just for the Internet, while coverage organized by sport, athlete or country could cost, say, $19.95. Many people pay premiums to get international networks via satellite or buy subscriptions to international sporting events; why not pay for customized Olympic coverage?

The IOC might not like it, though, and some of the limitations are driven by IOC rules.

For instance, the IOC refused to allow any broadband video transmission until tests showed it could be secured and limited to match territorial rights.

But it was NBC's decision to withhold true video-on-demand -- i.e., allowing viewers to download coverage of an event or show on their own schedule. Miss that last jump in the equestrian team event and it's gone -- unless someone at NBCOlympics.com decides to use it as a highlight. Want to watch all the badminton matches? Too bad. You might catch a fair amount if you set a video recorder to capture all the hours of each broadcast promising to include the events that matter most to you. You'll also end up with hours of coverage you don't care about.

And it was NBC's decision to limit its already limited video clip library to users with Visa credit cards who were willing to provide their full names and the first six digits of their card numbers. Visa is the official credit card of the Olympics and the presenting sponsor of online video. Then again, Panasonic is the official electronics sponsor of the Olympics, and NBC still managed to use competitor Sony as the sole presenter of its high-definition Olympics coverage.

NBC also uses a digital rights management system that in some cases requires users to upgrade their software and then tweak their Windows Media Player preferences to provide the least annoying method of calling up video. (If my experience holds true for others, NBC must be getting a bump in commercial delivery from people who have to select a clip two or three times before they can successfully watch it.  The commercials, of course, play without DRM.)

I'd be a pretty frustrated consumer if I went through all of that to watch a clip that turned out to be shorter than the commercials, which happened with one piece I watched. It would barely be worth it to see full highlights or live streaming video. In order to gain the most consumer acceptance, watching online video has to be as easy as clicking the simplest remote -- and what you get has to be worth watching. That's not meant as a knock on the quality of the posted clips; I enjoyed replaying highlights of the men's 200-meter freestyle relay set to the tune of The Who's "Relay," and the daily highlight reels probably meet a lot of needs.

Explain's NBC's Silverman, "The editorial team makes decisions on which video highlights to post. We post highlights once the featured event has aired on one of the NBC networks." He declined to provide traffic numbers, adding "We don't release specific numbers on video registrants or streams." The site lists what are described as the most popular videos: on Thursday, the list included highlights from the opening ceremony, Day 1 and Day 2 -- and, oddly, a basketball highlight from 2000.

According to Silverman, the most popular sections on the site are "results (NBCOlympics.com is the only U.S. based site with real-time and comprehensive results), TV listings (our site is extremely valuable for viewers trying to navigate NBC's 1,210 hours of Olympic programming), sports sections (the bread-and-butter of the site) and athlete bios (we have more than 1,250 including one on every U.S. Olympian)."

By Wednesday afternoon, some 65 video clips starting with one of the opening ceremonies were online including single highlights, event roundups and daily updates. They might total more than an hour without the commercials.

It may sound like an impressive amount. Compared to zero, it is. Compared to the potential, it's a drop of water in an Olympic-sized swimming pool. As I write, it's 10 p.m. in Athens -- 3 p.m. Eastern -- and only one highlight clip from today has been posted.  During the same time, NBC aired 33 hours of fresh coverage and 15 hours of high-definition video from previous days.

Meanwhile at the BBC, Sports Interactive Editor Ben Gallop said "the response has been very encouraging. The BBC has never attempted such an ambitious broadband project and we have received a lot of positive feedback. So far the broadband service has been receiving between 70,000 and 100,000 daily users."

The BBC's most popular live stream to date has been the badminton mixed doubles final, where the British pair won silver. The BBC recorded 7,000 concurrent viewers for that stream.

If current trends continue, I can see NBC executives looking at this year's ratings and patting one another on the back.  But I also see a hollow victory if they rely on those results to reinforce the current business model and shape future coverage. Ditto if other broadcast providers follow suit.

While many -- maybe most -- consumers are still willing to be passive viewers, increasing numbers want control. Propelled by cable companies, digital video recorders and video-on-demand are taking hold. On the computer side, "media center" PC sales are up, and devices that share streaming or stored media across the home are already in use; high-quality personal media players are hitting the market and will increase in use as prices come down.

Add to that a generation of viewers raised on the notion that they can get media whenever they want it, and sticking with today's way of doing business becomes tomorrow's downfall.

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Related Links
BBC license fee
BBC's Olympics coverage
BBC's statement of purpose
BitTorrent
Dutch Broadcasting Foundation's Olympics coverage
European Broadcasting Union
IOC marketing report (PDF)
International Olympic Committee
NBC Olympic TV listings
NBCOlympics.com
Olympic Movement
PVRblog: The Olympics are almost here
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