The strategy is working, in its own way. Even with the awkward five-hour delay -- too small to swap day for night a la Beijing, but late enough that England is asleep by the time New England finishes dinner -- these Olympics are smashing all-time viewing records.
Television is still a war of attention, and the most valuable attention isn't in your browser tab. It's on your HDTV.
Audiences shouldn't be so upset, and NBC shouldn't feel so smug. The network is caught between two fundamental forces. On one side is the absurdly high and rising cost of the Olympics. NBC paid $3.5 billion for the rights to the five Olympics between 2000 and 2008, $2 billion for the Vancouver and London games, and a whopping $4.38 billion for the four Olympics between 2014 and 2020. But as the costs go up, the revenue game is getting complicated. The television audience continues to splinter across devices and screens where advertisements pay dimes or pennies on the dollar compared to television.
Since the games are streamed live all day on NBC.com, an optimist might say: More viewing options, smashing! A pessimist might amend that enthusiasm by pointing out that video is only available to households with a cable subscription (NBC is owned by a cable provider, after all), so the message seems to be: We want audiences
to have choice ... so long as they choose the option that makes us the
most money. In short, NBC and Comcast came up with a 50% solution that gives 100% of viewers something to complain about. You either watch on a small screen with buffering or you watch on a big screen many hours after the winners have already been announced.
AN OLYMPIC-SIZED CRISIS FOR TV
NBC's Olympics crisis isn't unique. It is remarkably similar in scope to the debate we had last month over HBO Go. It is the fundamental crisis of television. The rising cost of content and the proliferation of video-enabled devices creates one distinct pressure for cable companies to raise prices and protect the cable bundle and a second distinct pressure for cable companies to accept lower profits by innovating wildly and giving audiences access to every show they want, on-demand, on any device, at an a la carte price.
The most outspoken voices clamoring for wild innovation are often the younger, more affluent, more urban, and more tech-savvy (often media) people griping on Twitter, who don't want to pay for cable, but also want to watch the Olympics and "Game of Thrones" whenever they feel like it. This is all fine and well -- if journalists weren't talented at raising awareness, they wouldn't be very good at their job -- but the impetus to blow up the old TV/cable business model isn't as strong as we'd like it to be. Between 80 and 90 percent of households have a cable subscription, and the level has been pretty steady for the last ten years. The estimated number of households who qualify as "cable-cutters" is as low as 2 percent. (An even smaller share of HBO's audience -- about 1 percent -- is through its app HBO Go. Even for shows like "Girls," it's 4 percent.)
Not every dilemma is an "innovator's dilemma"
"The problem for NBC as for other media," Jeff Javris wrote, "is that
it is trying to preserve old business models in a new reality." Maybe! It is entirely conceivable that, by refusing to find more creative ways
to distribute video, NBC and HBO and other providers are falling prey to
a classic innovator's dilemma, by tinkering and iterating their fraying
business model rather than throwing it out and starting fresh. But not
every dilemma is an innovator's dilemma! The end of TV and the death of the cable bundle might be around the corner. Or it might be the case that it's going to be a lot harder to topple the cable provider/bundle system that anybody would have imagined 5 or 10 years ago -- and that NBC's old-school plan to maximize prime time commercial revenue is objectively the best strategy.