May 2, 2011
The wildly popular U.S. men's college basketball face-off known as March Madness offered a teachable moment this spring. Thanks to a partnership between CBS and Turner Sports, not only was more of the tournament shown live on TV than ever before, but every game was streamed online for free. And here's the kicker: viewership in both domains was up over last year. In the case of online, way up.
That's significant because an oft-heard argument among broadcast networks, rights holders and others is that streaming live sports on the Internet and on mobile devices cannibalizes their cherished TV ratings. In fact, March Madness is the latest in a series of high-profile sporting events including the 2008 Olympics in Beijing and the 2010 World Cup in South Africa that suggest the opposite may be true: live streaming can happily live side by side with TV viewership, and may even enhance it.
"You can make a compelling argument that there is room for both of these things to coexist," Michael Son, who acquires and develops content for YouTube Sports, said on the topic recently. "Having live streaming available can very well drive interest for broadcast."
Son was one of several panelists who discussed how the world will watch sporting events in the future at a recent UCLA Anderson School of Management conference. But despite general consensus on the streaming issue, the experts said the argument is no slam-dunk and will likely face resistance from cable operators and others eager to stem the growing numbers of people dropping their cable and other paid TV subscriptions aka "cord cutters."
Live Streaming on the Rise
But there's no denying the stats. Online streaming of the March Madness tournament via the March Madness on Demand (MMOD) website this year posted record numbers, with total visits growing by more than 60 percent and hours of video watched increasing by more than 17 percent over 2010 figures. At the same time, TV broadcasts of the games were up 9 percent over last year, averaging 9.5 million viewers not a record, but still a substantial increase.
Likewise, TV viewers tuned in en masse to NBC Sports for the 2008 Beijing Games, which were streamed heavily on NBCOlympics.com. According to Nielsen, viewers totaled 211 million, making the games the most-viewed event in U.S. television history. Add to that extensive streaming of other high-profile sporting events such as the U.S. Open and the Tour De France. (One exception: The 2010 Vancouver Games also scored big on TV, but NBC chose to restrict live streaming of the games to hockey and curling.)
An emerging tenet in the world of multi-platform video is that users will watch on the best available screen. In other words, a 50-inch plasma TV will generally trump a PC, tablet or mobile phone screen if available. But if you're stuck in line at the grocery store or in the bleachers at a Little League game and just have to get an update on the play-offs, a smaller screen is better than none at all.
"Streaming outside that bundle of programming that people buy is really the issue."
That may account in part for the success of concurrent streaming of sporting events that are sometimes beamed live from across the world, on week days during working hours, said UCLA conference panelist Dana McGraw, director of product strategy at Yahoo! Sports. That's when many people, far from their living-room flat screen, are more likely to watch on a PC or mobile device at work. By contrast, NBC's decision to run Sunday Night Football online appeared less successful because most viewers are at home on Sunday nights and can easily watch the game on TV.
Still, the question of whether or not to stream is not cut and dry. Another conference panelist, Mike Hopkins, president of affiliate sales and marketing for Fox Networks, said broadcast networks, cable channels and satellite buyers are not against streaming, but they must protect the $50 to $100 per month they receive from subscribers. "The streaming in and of itself isn't the issue," Hopkins said, "but streaming outside that bundle of programming that people buy is really the issue."
Hopkins predicted networks and cable companies will roll out plenty of content this summer for online and mobile with the proviso that it's within a user's subscription package. This is an emerging business model whereby certain premium content, such as TV shows and movies, is made available online but only to users who can prove they have a subscription to the relevant telco, cable or satellite operator.
Panelists, however, said the model has been somewhat hampered to date by the clunkiness of the authentication system, sometimes referred to as "TV Everywhere." For example, among users who tried to authenticate themselves on NBCOlympics.com to watch the 2010 games, four out of five gave up before the process was complete, Son said. He noted that some companies are working on an industry standard to improve the user experience.
The Holy Grail: Addressable Advertising
Panelists agreed that enhancing the online experience by wrapping in data, real-time stats and the ability to engage socially with friends can definitely sweeten the proposition to users, many of whom tune in via additional screens while watching TV the so-called "second-screen experience." But the jury is still out on whether the TV Everywhere model will stem the tide of cord cutters, given the widespread availability of free content on the Web.
"If you want to compete … you've got to give people the ability to watch where they want to watch," said Ben Grossman, editor-in-chief of Broadcasting & Cable. "If they don't want to watch it on TV and they want to watch it on the Internet and you're not offering it to them, they're going to go find it illegally."
What cable operators, broadcast networks and rights holders want to avoid is their premium sporting content going the way of the TV series "House," which is watched by 45 percent of viewers ad-free on DVR, Hopkins said. "Fox doesn't make a dime on it," he said.
To that end, if there's a Holy Grail in live sports distribution, it's the as yet unrealized ability to target ads to individual TV viewers. This would lead to fewer ads at a higher CPM (cost per thousand) and an improved user experience because viewers might actually want to watch the ads, Hopkins said.
"In five years, it will be very similar to today but consumers will get a whole lot more for their money," he said. "Beyond five years I'm not sure."
Laurence Cruz is a freelance writer in Los Angeles.
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