Olympics 2016: Behind the Grand Media Experiment of the Summer Games

Olympics 2016: Summer Games Partake in
Dylan Coulter for Variety

Jim Bell has been part of NBC Sports’ Olympics broadcast team since 1992. Next month’s Games in Rio will be his third Olympics as executive producer. Bell is responsible for scheduling 2,084 hours of programming across 11 networks over more than two weeks — along with 4,500 hours of live events on NBCUniversal’s digital platforms. What he does is a science informed by reams of data and decades of inherited wisdom. Except when it’s not.

“Bravo has been a place where we’ve had tennis, but I’m not really sure why,” Bell says. “It seemed like a good idea at the time, and no one has complained about it.”

Dylan Coulter for Variety

Bell is explaining why certain sports are scheduled on certain channels. He’s also speaking, inadvertently, to a core truth about the Olympics and NBCU. The Games are a multibillion-dollar investment for NBCU and its parent company, Comcast. But they’re also a massive experiment, one filled with trial, error, and success from which researchers cull insights about the changing behavior of TV customers.

The Rio Games, which run Aug. 5-21, may be the biggest experiment yet — not least because of the potential problems plaguing the host city, from heavily polluted waterways to crime to Zika. For NBCU, the Games are a first draft of future Olympics — and the future of the media company itself.

Every Olympics is, as NBCU executives like to say, a “billion-dollar laboratory.”

But Rio is a special case. The 2012 Summer Games in London took place just one year after Comcast acquired control of NBCU from General Electric. Comcast moved quickly at the time to wrap up U.S. broadcast rights for the Olympics through 2020, paying $4.38 billion for two Winter and two Summer Games. In 2014, it doubled down on its Olympic commitment, paying $7.75 billion to extend the deal through 2032.

So Rio is the first Summer Olympics that Comcast has had a real chance to prepare for. It’s also the first step on a road that leads beyond the horizon.

NBCU expects to profit in Rio, projecting ad sales to exceed the $1.23 billion it paid for broadcast rights. But past Olympics have been break-even affairs. The most important return NBCU receives on its Olympic investment is the halo effect around everything else the company does.

Command Center: Executive producer Jim Bell Heidi Gutman/NBCUniversal

In 2014, NBC used the Sochi Games as a platform from which to launch “The Tonight Show” with Jimmy Fallon, which has dominated late-night ratings ever since. Rio will drive viewers again to “Tonight,” as well as to “Today,” which has been locked in a battle for morning-show supremacy with ABC’s “Good Morning America.” The Games will also provide the broadcast network an opportunity to promote its upcoming fall schedule to an audience of rare size. The 2012 London Games drew 217 million viewers across multiple NBCU television networks and digital platforms; Rio is expected to draw more.

That’s due in part to location. Rio is one hour ahead of the Eastern time zone. Having the Summer Olympics in the Western Hemisphere for the first time since the 1996 Atlanta Games will allow NBC to feature more live events in its primetime telecast, still the centerpiece of the Olympics package.

Events in Rio will run from roughly 8 a.m. to midnight. “So that’s a time when a lot of people are up and alert and active on devices, and hopefully when they head home, they’re able to flip on the tube and watch a lot of live Olympic content in primetime,” Bell says.

NBC’s primetime Olympics telecast will in many ways look like it always has. It will fixate on emotional stories of athletes overcoming adversity. It will feature Bob Costas (this time, one hopes, sans the pinkeye he sported in Sochi — “A moment that went both literally and figuratively viral,” Bell says). There will be new additions, such as broadcaster Mike Tirico, recently hired from ESPN, and some souped-up graphics. But the bones of the telecast will be the same as they were in the ’90s.

The big changes will be elsewhere. This will be the third Olympics in which NBCU makes every event available to watch live on digital platforms for authenticated cable subscribers. It will be the first to feature 4K and virtual-reality telecasts.

“There has always been a learning aspect to the Olympics for NBC. But certainly technology has allowed for more robust experimentation.”
Mark Lazarus, NBC Sports

In September, Alan Wurtzel, NBCU’s longtime research chief (who coined the term “billion-dollar laboratory”), will gather company executives and members of the press for a ritual postmortem presentation, in which he will reveal what he and his staff learned about viewer behavior from the Games. Back in 2012, when NBCU streamed live events for the first time, the major concern was whether doing so would draw users away from the television. Wurtzel found it had the opposite effect: The more screens a viewer used, the more time he or she was likely to spend watching the Olympics on linear television. Those who watched only the TV screen averaged 100 minutes of linear-TV Olympics viewing per day in 2012; those who used three additional screens spent 171 minutes.

In Rio, Wurtzel will look closely at social media. “What we really want to understand is how people are using it,” Wurtzel said. “It’s my sense that social media is actually going to result in greater viewing of the mothership — the primetime program.”

These Olympics will be the first in which NBCU pushes highlights through social media. The company has a deal to create a daily live story on Snapchat, as well as an NBC Sports Olympics channel on Snapchat Discover. The Discover channel will be populated with content produced by Buzzfeed, which has been partially owned by NBCU since August 2015. There are also plans to program content to Twitter, Facebook, and other social outlets.

Playing highlights on social media seems like a no-brainer — the men’s 100-meter dash, for example, lasts less than 10 seconds, or about four seconds longer than a Vine video. But considering how much NBC pays for the Olympics, giving away content on platforms that are difficult to monetize carries risk.

Asked whether he worries that social media will cannibalize TV viewership, NBC Olympics president Gary Zenkel answers, “No,” then points to the findings of Wurtzel’s lab.

“I might have answered that question differently if you had asked it before London in 2012,” he says. “But now we feel quite bullish about this strategy.”

Countdown: Rio prepares for the Games Kyodo/ap

NBC has a deep history of Olympics experiments successful (live streaming) and less than successful (1992’s Triplecast pay-per-view disaster). That history has fueled the billion-dollar-lab mindset. So has the reinvention of NBCU’s corporate culture under Comcast.

Since acquiring the company, Comcast has worked to reshape NBCU in its own buttoned-up image. But Comcast has also changed. The NBCU deal and the more recent acquisition of DreamWorks Animation have turned the cable provider into a media power. It now seeks to add “technology giant” to its résumé. Next to its corporate headquarters in downtown Philadelphia, the company is building a skyscraper that, when completed, will be the city’s tallest building. It will house Comcast’s technology divisions and serve as a startup incubator.

“When you say ‘cable provider’ — which is totally a fair thing — I bristle,” says Matthew Strauss, Comcast’s head of video. “The reason I bristle is in part because we are going through a transformation in our company, both internally and externally, around how we are going to market with products, how we are looking to transform our customer experience, and the journey we’re on to really be customer-centric.”

This transformation is no small feat for Comcast, a company that routinely ranks at or near the bottom of the American Customer Satisfaction Index’s quarterly telecom ratings. The best evidence that said transformation is real — and not just a public-relations figment — is the X1. A tricked-out set-top box with a voice-control remote, X1 houses a platform that Comcast hopes will lower the walls between linear and digital content.

During a demo in May at the Internet and Television Expo in Boston, Comcast CEO Brian Roberts showed off the dashboard that will let Olympics viewers quickly — using the voice remote — call up video of any event, regardless of whether it was carried on broadcast, cable, or streaming.

Asked how important X1 is to Comcast’s future, Strauss goes big.

“For every person who says, ‘I don’t like my cable company,’ we’ve got more to do. But there is a growing number of customers who are giving us another chance.”
Matthew Strauss, Comcast

“It is foundational,” he says. “If you look at X1 and all you see is a guide, then you are really only scratching the surface on the capabilities of what we are building.” What X1 is, he argues, is a cloud-based platform not just for video, but for everything. “When we introduce home automation, where a customer wants to control the thermostat in their home instead of having to get up and go across the room to do that, we can now do that in the cloud.”

A television screen, according to Strauss, “is just a display.” X1 is about more than bringing video to that display. “It’s about creating the best experience in the home and thinking of all the different types of services we can bring to that video display so you never turn it off.”

For more than a decade, pay-TV providers have eyed the Internet of Things as a growth opportunity. Now, with the Federal Trade Commission estimating that there are 25 billion connected household devices in the U.S., it’s becoming one. Cable providers already have a pipeline into customers’ homes. All they need to do in order to provide security systems, nanny cams, and the ability to check from 3,000 miles away whether your refrigerator is running is the right device on the other end of that pipeline. Comcast wants X1 to be that device.

But to get its customers to hand over control of their thermostats, Comcast must overcome its reputation for being Comcast. The romance of cord-cutting is rooted in the universal disgust that customers feel for their cable companies. (The ACSI found last year that cable and internet providers tied for lowest-ranked among 43 industries in customer satisfaction.) Strauss is aware of this. Every night before he goes to bed, he searches “Comcast” and “Xfinity” on Twitter. The results are often ugly — but not always.

“Every once in a while I will see a tweet from someone that says, ‘X1 is the coolest thing I’ve ever seen,’ or ‘I can’t believe Comcast created this voice remote,’” he says. “For every person who says, ‘I don’t like my cable company,’ we’ve got more to do. But there is a growing number of customers who are giving us another chance.”

The Olympics are another chance on a huge scale. With 40,000 units being installed per day, Comcast expects to have X1 in the homes of half the 22.4 million subscribers to its Xfinity cable and internet service by the time the opening ceremonies kick off in Rio. Each of those customers who has a positive experience using X1 to engage the Olympics will be a little less likely to cancel their Comcast subscription, find a new wifi provider, and sign up for the latest skinny bundle. Comcast added 53,000 video subscribers in the first quarter of 2016, its best first-quarter result in nine years, and one that counters industry trends. Rio is a chance to build momentum.

Instant Gratification: Comcast CEO Brian Roberts demos the X1. It will allow viewers to call up video of any event using a voice-control remote. Courtesy of Comcast

“I think that there has always been a learning aspect to the Olympics for NBC,” says NBC Sports chairman Mark Lazarus. “But certainly technology has allowed for more robust experimentation and learning over the last six or eight years. I don’t think it’s particularly new. I think technology is a little bit more robust.”

But technology does not allow the billion-dollar lab to exist in a vacuum. Inevitably, the real world imposes itself on the Olympics. A star athlete will be injured or a contest delayed, and Bell and his team will have to toss their broadcast plans and improvise. That’s a given.

Indeed, the real world is asserting itself forcefully in Rio. The Zika outbreak has prompted several athletes to announce that they will skip the Games, as will NBC’s “Today” co-anchor Savannah Guthrie, who is pregnant. Backed by the World Health Organization, NBCU and the International Olympic Committee have downplayed Zika concerns, but some health officials continue to sound an alarm.

“People are traveling in from all over the world, and you could spread Zika back to places that don’t have it right now,” says New York University bioethicist Arthur Caplan.

Zika is just one potential crisis. The waters set to host sailing, rowing, and the triathlon are reportedly filled not just with oil and human feces but with an antibiotic-resistant superbacteria. Already one Olympian was hospitalized with MRSA after sailing there.

Brazil, meanwhile, is in political crisis. In May, the country’s corrupt legislature voted to oust its unpopular president. Homicide and street crime are on the rise. Police officers greeted passengers at the Rio airport this month with banners that read “Welcome to Hell” — part of a strike to protest the withholding of their paychecks. Financial chaos has affected hospitals, and medicine and basic medical equipment are reportedly scarce. Infrastructure projects, such as a light-rail line connecting Olympics facilities to downtown, remain incomplete.

In June, the state of Rio was granted a $900 million federal bailout after declaring a financial emergency. Lazarus equates the move to “things that our government has done to allow the government to continue, such as upping our debt limits.” On Monday, NBC announced plans to air a preview special Aug. 4 that will focus on the challenges facing Brazil. The opening ceremonies will commence the next night, shifting the coverage in a positive direction.

NBCU sells the Olympics as a family- friendly epic of inspiration. Rampant disease, injury, or lawlessness would endanger that narrative.

But Rio is not the first Olympics to see off-field turmoil. The 2014 Sochi Winter Games faced an outcry over anti-gay laws imposed by Russian president Vladimir Putin, who also drew criticism for his meddling in Ukraine.

A total of 178 million people watched some portion of those games on NBCU platforms; even when it’s the subject of handwringing, the Olympics draw more eyeballs than anything else on TV.

“Reach is becoming more rare, and therefore more valuable,” says Needham analyst Laura Martin. “People are making more money on these big-reach productions like the Super Bowl, like the Olympics,” because there are so few of them.

That scarcity is what makes the billion-dollar lab so valuable. And none of NBCU or Comcast’s competitors will have access to that lab for at least another two decades.

“It’s the best kind of laboratory you can have,” Wurtzel says. “It has a huge amount of content across all the different platforms. It has an enormous amount of consumer use. And it lasts over 17 days. We use it and have always used it as a way to get a glimpse of the future.”

That future starts in August.