U.S. markets open in 4 hours 52 minutes
  • S&P Futures

    -13.25 (-0.29%)
  • Dow Futures

    -112.00 (-0.32%)
  • Nasdaq Futures

    -42.25 (-0.27%)
  • Russell 2000 Futures

    -10.70 (-0.47%)
  • Crude Oil

    -0.60 (-0.72%)
  • Gold

    -0.40 (-0.02%)
  • Silver

    -0.18 (-0.74%)

    -0.0008 (-0.07%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    +0.27 (+1.72%)

    -0.0019 (-0.14%)

    -0.3230 (-0.28%)

    +1,692.28 (+2.64%)
  • CMC Crypto 200

    +69.95 (+4.72%)
  • FTSE 100

    -25.51 (-0.35%)
  • Nikkei 225

    -546.97 (-1.87%)

Olympics TV ratings drop, but that’s not the whole story

Television ratings for the Summer Olympics in Rio on NBC have not been good. They have been bad. They have fallen 17% from four years ago in London.

Before the Olympics began, Bloomberg points out, NBCUniversal CEO Steve Burke said that his “nightmare” would be a 20% ratings drop. That has basically happened. And if you drill down to 18- to 49-year-olds, it did happen: ratings fell 25% among that key group.

But that’s not the point. The bigger story here is that digital viewership is up, up, up. In the first week of these Games, online users streamed 1.86 billion minutes of NBC’s coverage, handily beating streams for the Olympics in London and Sochi. Last Saturday, NBC boasted in a press release, was the best day ever for NBC Olympics on digital platforms, with 155 million live streaming minutes, up 263% from the comparable day at London in 2012.

In other words, while some surveys do suggest a drop in overall interest in the Olympics, and NBC has to deal with that, we are also seeing an inevitable rise in digital viewership that draws people away from their television sets. It is a rise that has been coming for years, that everyone anticipated, but it has now reached a point where networks can no longer ignore it.

“It’s amazing that people are at all surprised by the Olympic viewing numbers,” says Jim O’Neill, an analyst for digital video platform Ooyala. “TV has been in gradual decay across almost every demographic for the past decade, and still, Comcast/NBC (CMCSA) structured the Olympics broadcasting rights in the old way. Forcing the viewer to be a pay-TV subscriber, or a subscriber to a service like Sling TV to watch the games, even online, artificially limited their audience.”

Indeed, NBC reportedly spent $12 billion to get exclusive US broadcast rights to the Olympics through 2032. And rather than rethink its investment now, it ought to rethink the way it takes advantage of those rights. This year, it offered more content on digital platforms than ever before: viewers, if they wished, were able to watch every single event on something other than a television. But they still had to have a cable login, and therein lies the problem. By requiring cable login credentials, NBC didn’t do enough to pull in cord-cutters, or “cord-nevers” (those who never paid for cable in the first place).

Despite the ratings fall from 2012 to 2016, NBC is still beating all the other networks during the Olympics, which counts as something of a win. It has also seen a bump for channels like NBC Sports Network and Golf Channel during the past two weeks.

NBC is hardly the only cable operation dealing with waning viewership. Ratings for Super Bowl 50, which aired last February on CBS (CBS), fell from the year before; it was only the No. 3 most-watched Super Bowl ever. ESPN, the “worldwide leader” in sports, feels the pain as well—it has been losing subscribers for over a year. But it has shown signs that it is dealing with the massive shift, like cutting a deal to produce smartphone-exclusive sports content for Tencent customers in China. And in Disney’s (DIS) most recent earnings report, earlier this month, ESPN’s parent company showed the strongest sign yet that it is ready to accept the reality and go digital: Disney bought a 33% stake in Bam Tech (the recently spunoff video streaming business of MLB Advanced Media) and together they will launch “a new ESPN-branded multisport subscription streaming service in the future.”

When Steve Burke said that a 20% ratings drop would be his nightmare, he added, “If that happens, my prediction would be that millennials had been in a Facebook bubble or a Snapchat bubble, and the Olympics have come, and they didn’t know it.” That’s not quite correct or fair.

Social media activity suggests that millennials are quite aware of the Olympics, they just haven’t been compelled to watch the full events on a TV. Rather than use Facebook and Snapchat to ignore the Olympics, they have used them to follow the Olympics. Snapchat cut a deal with NBC for highlights in its curated “stories” and 50 million people have watched Olympics content on Snapchat; Facebook cut a deal with NBC for “exclusive content” other than highlights. During these Games, sports fans have been able to find short clips and highlights all over the web.

It is all part of the fragmentation of sports viewership, and while the availability of quick clips on social media has not killed TV ratings yet, it has certainly plunged the knife in, and the blood has begun to flow.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

Read more Olympics coverage from Yahoo Finance:

How a federal statute allows the Olympics to be a trademark bully

Olympic golf returns after 112 years at a crucial time for the sport

“There has never been a great Olympics” says former editor of Sports Illustrated

Here’s what the stock market does during the Summer Olympics