Great news for sports fans: It’s shaping up to be the year that broadcast networks finally get comfortable with the idea of putting live games on the Web.
Not long ago, the networks were most leery about the idea of putting sports on the Web — for fear of losing TV viewers, which pay the enormous bills for broadcast rights. Now, simulcasting live sports on the Web is de rigeur, and the networks — CBS and NBC in particular — are putting all the sports they can online.
Case in point: The final between Roger Federer and Andy Murphy at the U.S. Open, which was postponed until Monday due to a rain delay. CBS and the U.S. Open decided to stream it live on the Web, and reaped 300,000 additional viewers, which watched for an average of 49 minutes.
With 2.1 million or so viewers for the final on TV, online becomes a significant percentage of the total audience — more than 10%. CBS and the U.S. Open streamed the final with the TV ads included, so CBS’s advertisers also go the benefit of the additional ad exposures.
Those two events were held during work hours for much of the country, so the Web was the only way to reach a big segment of potential viewers in offices. But both networks have shown that’s not a prerequisite.
CBS announced it will stream live all 17 SEC football matchups starting this Saturday, the first time Division I football has been streamed widely on the Web — a smart move given the interest in the games on campus. And NBC has started streaming live Sunday Night Football — national games! — something unthinkable just a year or two ago.
So what’s changed?
The networks have come around to the notion that live Webcasts don’t cannibalise live TV broadcasts; even the best Web streaming is a poor substitute for TV. Unlike TV shows, which are also expensive but have a significant after-market in DVD sales and syndication, live sports are valuable only while they’re live — giving those paying for the rights the incentive to seek the broadest audience possible.
The next challenge: How to make money from a growing online audience.
So far, the ad strategies have been muddled. NBC threw online spots into TV deals for the Olympics and reaped a mere $6 million from the games online, a rounding error on the $900 million they paid for the rights. CBS aired the US Open with the TV ads, which would indicate they didn’t see much in terms of revenue. NBC’s Sunday Night Football cuts out the TV ads and replaces them with Web-only spots, which is impressive, but probably not material compared to the production costs and the $600 million they pay the NFL annually for the rights.
The key is getting advertisers to buy the Webcasts separately, which could deliver a higher ad rate than TV, or to get them to pay extra for the online viewers who are exposed to a TV ad. But that’s not as easy as it sounds, because Nielsen TV ratings don’t sync with metrics on the Web. We’ve seen both strategies so far.
Ultimately, this will all be sorted out, and the networks will be compensated for the viewers they reach, whether on TV, on the Web, or on mobile phones. In the future, the network decision making on live sports won’t be about protecting the TV broadcast, but about putting the games where the viewers are, and where they can be paid sufficiently for reaching them.
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