Interesting story regarding television coverage of the next Olympics on the day that private equity firm VSS comes out with the most bullish Web advertising study, ever.
After airing 1,210 hours of programming covering the 2004 Summer Olympics in Athens, NBC will air a mind-numbing 3,600 hours next year in China. Naturally, most of that will come online.
The Beijing Games take place Aug. 8-24, 2008, so 16 days.
Let’s do the math, 3,600 hours, 16 days.
3,600 hours of content over 16 days means on average 225 per day. In other words, they’re simply going to be playing non-stop coverage on the Web.
First off, I’d like to state that this is a great move by NBC. There are no two ways about that. But, I’d like to use this as a simple example of how the Web does little to boost revenues for TV companies, and how digital is really not incremental for TV companies.
Raise your hand if you think that NBC sells the Web component of the Olympics separately from the TV ad deals?
Indeed, they don’t. NBC bundles web advertising into the expensive packages they sell online.
[Side-note #1: Yes, away from these extraordinary, high profile events, some offline companies are using the Web to force advertisers to buy print ads. I believe Vogue was doing this last year, with their fantastic Style.com website for men and women. But even there, digital is not in fact incremental for print, it is obviously coming at the expense of print].
But, the point is, by and large, the Web does little to offer salvation to traditional media companies. The sooner media companies come up with distinct content strategies for the Web, the sooner. The sooner traditional media companies get their content online, the sooner they shrink their businesses. It’s not an enviable position.
[Side-note #2: In fact, I’d argue that you will probably at some point, believe it or not, see online content producers exert reverse pricing power (cheaper cost of production) and go offline… it sounds crazy now, but if you think about it, it will make sense when traditional media finds it no longer efficient to publish offline and moves online, creating an opportunity].
Either way, the Olympics is a classic example of how even the most premium content does little to boost the top line for TV companies, because
- the argument that the people watching Olympics on NBC.com are very different from those watching on TV, too (at different times of the day) is a weak one. It’s basically people who a) would spend hours when home who would tune in at work, too, for example, or b) niche sports and foreign American viewers tuning in to see their country as NBC goes overboard with American coverage.
- it’s something they have to toss in to the higher, more expensive TV packages.
- worst off, if they tell advertisers that they have to buy the Web separately than TV - in an effort to build an incremental revenue stream - then advertisers will simply choose the Web, cause it’s cheaper.
I really don’t want to paint a doom and gloom scenario, but having studied the fate of newspapers and magazines, I cannot possibly imagine a bullish sentiment in TV company boardrooms.
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