STEVE INSKEEP, HOST:
For the privilege to broadcast this summer's London Olympics, NBC paid more than $1 billion, 1.18 billion to be exact. As part of the deal, the network gets the right to stream the entire Olympic Games, every event, live, online. It's going to be the first time American viewers will be able to see all the games live, rather than have the network tape-delay games for prime time broadcast.
We're going to talk about this with John Ourand. He's the media reporter at Sports Business Daily. Welcome to the program.
JOHN OURAND: Thank you.
INSKEEP: It is 2012. You surprised this didn't happen sooner?
OURAND: Oh, very surprised. I'm surprised it didn't happen four years ago, or even eight years ago. It's established that people are watching video online. And people also are rejecting tape-delayed broadcasts, which is what NBC had done two years ago, four years ago, six years ago and eight years ago.
INSKEEP: Well, NBC must have noticed people being unhappy about this. Why did they resist?
OURAND: They resisted because they were worried that by putting everything out online, it could potentially dilute the audience of their primetime program. And if they dilute that audience, all of a sudden the ad rates are going to go down and they're going to get less viewers for the primetime. And that's really what drives this whole deal.
INSKEEP: What showed them that there might be a different way to go here?
OURAND: Four years ago, in Beijing, Usain Bolt had a thrilling race where he set the world record in the 100-meter dash. That was seen on pirated sites almost instantaneously. You could go to any sports blog and you would have been able to see video of Usain Bolt.
INSKEEP: Well, when this Bolt race went around the world, went to America, did it actually hurt NBC then or help them?
OURAND: There is a belief now in the sports media industry that it did help them because it helped market it. And so people said, wow, I saw that on a grainy video on some sports blog on my little computer screen. I want to be able to sit there on my hi-def TV in my den and really watch it in perfect quality.
INSKEEP: Oh, so the thought is that this may actually drive more primetime viewers or at least not cost any?
OURAND: That's what other networks are finding. They're finding that sports ratings are increasing, even as there's more video that's being made live online.
INSKEEP: You know, this is a biennial story or quadrennial story, depending on the way you think of it. But it is often pointed out that as much as NBC pays for the Olympics, it doesn't seem like they necessarily make that money back. It's a money loser. Is that actually correct, and are we missing something here?
OURAND: Well, it's difficult to say, actually. NBC did say that they lost $223 million on the Vancouver Olympics. And when Fox and ESPN bid on the most recent Olympic Games, they bid about a billion dollars in total less than NBC bid. And they said that where they bid, they could just barely make a profit.
But it's more than just ad sales that people are looking at it. If you look at NBC, they have a whole stream of cable networks - like USA, CNBC, MSNBC - that carry Olympic programming. And all of those networks are very widely distributed. And one of the reasons that they're widely distributed is they carry that Olympic programming, and cable operators didn't want to do without that programming.
INSKEEP: So can you imagine a future in which the streaming of the Olympic Games actually would become bigger than the broadcast of the Olympic Games?
OURAND: Well, in a future of, you know, 40, 50 years from now?
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OURAND: Absolutely. I don't see it happening really - TV is what drives the biggest audience.
INSKEEP: We talk about the Web all the time, but TV is what people watch.
OURAND: Absolutely. The digital is getting closer to TV, but if that continues...
OURAND: ...in 2030, 2040, you could see that. But who knows how we'll be watching anything in 2030 and 2040.
INSKEEP: John Ourand of Sports Business Daily, thanks for coming by.
OURAND: Really had fun, thank you.