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NBC Sports Chairman Lazarus: London Olympics are a ‘grand experiment’

Mark Lazarus is no stranger to big sports events but the 2012 Olympics trumps them all. Lazarus, the chairman of NBC Sports Group, joined NBC Universal(s cmcsk)(s cmcsa) as part of the Comcast merger, becoming chairman of the NBC Sports Group more quickly than anyone imagined when sports broadcast legend Dick Ebersol opted out just after the 2011 upfront. Ebersol is in London as an advisor but Lazarus is in charge of NBC’s Olympics. We caught up by phone Wednesday while he was at NBC Olympics headquarters in London. Here are a few highlights from our chat about digital strategy, the latest revenue numbers, authentication, metric goals, the heavy commitment to live streaming and more:

On digital revenue

paidContent was first to report NBCU’s $25 million in digital revenue for Beijing and that the network was more than doubling that revenue for 2012 to $55.5 million, based on $900 million in overall ad revenue. NBC announced Wednesday that it has passed the $1 billion mark in ad revenue and digital revenue rose with it. Lazarus told me six or seven percent of that is from digital. The new number is more than double that of Bejing, about $60 million, and if it winds up on the higher end, will be nearly triple. It’s small compared to the overall revenue number — but serious.

Lazarus calls it proof that advertisers not only want linear on broadcast and cable, but also online and mobile. The bulk of that is from desktop or laptop; mobile continues to be the least monetized, he added.

On streaming

In previous years, NBC has been both willing to experiment and uncomfortable giving full live access to the kind of events that would be in the prime-time spotlight. NBC offered 2,200 live hours from Beijing and only two events — curling and hockey for Vancouver, about 400 hours. The barrier to watching events that were being offered live in other countries drove Olympics fans crazy. For London 2012, NBC is going all in. I asked Lazarus if that was a decision he inherited or one he made.

“We made those decisions when I got into the role. They had a working plan that was not as ambitious as it sounded. We had a straw-man discussion about how people were consuming media and watching the games — and we made the decision to stream everything live.”

The reasoning? Lazarus explained: “There are a certain number of fans who want the immediacy of watching it live. Since most of it will have to be authenticated or verified, it brings value to our cable and satellite partners.” Plus, he believes “people will still gravitate to our primetime programs.” That’s not just a gut feeling. “All the research we’ve seen and all the trends in the industry show that putting things more out there leads to greater and wider interest.” He expects the live streams to lead to more buzz and energy for primetime, not detract from it.

“The Super Bowl is a good example. It was the biggest digital event with 2 million uniques and 750,000 on concurrently — and also the most watched television show of all time. Of those 2 million uniques, 1.6 million were watching television while having a digital experience.”

On authentication/verification

Why keep most programming on over-the-air NBC behind an authentication wall? The vast majority of NBC viewers watch via cable or satellite operators paying for rentransmission consent.

What about people who don’t pay for broadcast access? Of 114 million television households, Lazarus says roughly 100 million are cable or satellite subscribers. “Maybe 14 million don’t pay,” he added. “When you’re doing 5,500 hours live, if there’s five or 10 percent [of streaming programming] you don’t need to verify, that’s a whole lot of hours.” That would be 250 to 500 hours.

“We also have more Olympic coverage on free TV than ever before ever before –270 hours.” So cordcutters will have some streaming access without doing backflips and those who don’t pay for TV will be able to watch some of the Olympics on their sets.

The time delay made it even more important to Lazarus and company to provide the live streams.

NBCU is pushing all of its primetime Olympics viewing to NBC. The other channels set for multiplexing during the day — NBC Sports Network, CNBC, MSNBC, Bravo — will have their regular programming. “During the day we have a lot of options for people but there’s a lot of content. In prime time, the only place to watch the Olympics will be NBC.” (Well, the only legal place. I’ll bet digital dollars to your digital donuts that some people will spend a lot of time trying to watch through other means.)

Why not offer a digital subscription? “We think the verification process is that form of payment,” Lazarus said. “We don’t think they should pay twice.”

What would he tell peers making similar decisions about whether to go the authentication route?“We all have our own business models. We each have different events we do our own ways. As an industry, we have to push to simplify verification so our customers can consume all this. Let’s make verification easier for the consumer — as an industry.”

On social media

In recent days, NBC has announced partnerships with Twitter, Facebook, Storify and more. I asked if there is any incremental revenue in the Twitter or Facebook deals or is it all about marketing? Lazarus was quick to reply: “Marketing; it’s not a revenue play for us. We’re using them to market and promote the games, to personalize, make a connection. We have a unique opportunity to utilize some of the biggest talents in the world of sports, in some cases, entertainment and news … In a way it’s a personal plea — even though it’s one to many, you sort of feel it’s one to one.”

For Lazarus, it’s all a work in progress:

“This is a grand experiment. This is a billion dollar laboratory. We’re playing with a lot of things for the first time and on this scale.”

On success

How will Lazarus gauge success? “The overall measure for me for success is more than 200 million Americans watch some portion of the Games, which would make it a top five American all-time event.”

He also would like to surpass the Beijing digital assets by 50 percent and on mobile, would like to have a significant number of people use the smartphone and tablet apps.

“Some measure is making all of this technology work together. Looking at total uniques and page views and how many streams, we think we’ve got enough technology… if we’re pushing the limits, that will be a success.”

Was there anything you couldn’t do with digital? “We’re streaming more content, more simultaneious streams than ever before. We’re challenging the technical limits. It’s not about what we couldn’t do. it’s about focusing on delivering.”

10 Responses to “NBC Sports Chairman Lazarus: London Olympics are a ‘grand experiment’”

  1. Georgiana May

    Those of us in the US should have access to BBC online streaming because:
    1. The announcers and broadcasting are much much better. Instead of the constant stream of snide and cynical comments seemingly to show how smart the announcers are, we actually have comments that highlight the tremendous efforts of _all_ the contestants.
    2. Perhaps explaining the above, _all_ of the NBC commentators are male, and 1/2 of them don’t know what they are talking about – is Michaels awake? does Costas really think he is funny? That NBC person doing the women’s bike race – huh? what planet? Isn’t it great that Franklin got her braces off so that you males could get a charge out of her smile? really, really pathetic.
    3. They show interesting events, not just those that US is supposed to get a medal in.

    NBC = 3 strikes, you’re out.

  2. Here’s the content of a couple of very telling tweets about NBC on 28 July one day into the Olympics.

    The first is from American Public Radio’s New York bureau chief and Wall Street correspondent for Marketplace – Heidi N. Moore ‏@moorehn
    >>> Just scanned #nbcfail. Hundreds of tweets just in past 15 minutes. Doesn’t look like a “loud minority” to me. Looks like unhappy audience.

    The second is from Melanie Powers ‏@mkpowers09
    >>> #NBCFail is trending & hashtracking of #NBCFail says: 1,500 tweets=2,081,894 impressions, audience of 1,357,238 followers in 24 hrs

    My personal opinion is that both NBC and also the IOC have been so busy trying to capture every last dollar from sponsors, but haven’t been concerned about whether they were angering the public.

    Not smart.

    • Staci D. Kramer

      I think NBCU knew from the beginning some people would be unhappy with the strategy and that looking for the good social media buzz also meant taking the bad. I’m not sure they realized how many elements would factor in the negative, including a bad reaction to the opening ceremony anchors, and I think they made a big mistake by not providing a live stream at least of the opener.

  3. luther blissett

    As for Lazarus’s argument about verification serving in lieu of payment: it’s not possible to pay for the necessary cable package to authenticate for Olympic streaming without having it physically installed (which incurs an additional setup fee).

    So there’s no joined-up thinking here at all, and Lazarus has, for all of his talk of innovation, kept the Dick Ebersol model of embargoing to primetime and expecting people to avoid knowing the results. He’s also fortunate that the IOC’s geographical restrictions make it hard for Americans to see what other national broadcasters are doing with their streaming coverage: let’s just say that NBC’s is an embarrassment compared to what CTV or the BBC are doing.

  4. bill ashdown

    does anybody really care about synchronized diving? i cant believe they get rid of womens softball, and still have something as stupid as sync diving. whats next 40 person sync diving, how ridiculous !! at least get a sport where athletic ability determines a winner, unlike diving where some doofus holds up a score card wait a minute, we should put dancing with the stars in the olympics, thats the ticket!! its bad enough they actually have sync diving, but you jerks go them one better and actually televise it . wheres roone arledge when you really need him? get your act together,,,,,,,,bill ashdown

  5. les berkeley

    I am outraged at not being to view the opening ceremonies because NBC flubbed the recording info given to Dish Network…..The only remedy I can see is for NBC to rebroadcast the opening ceremonies so we are not cheated out of the experience…………

  6. Absolutely astonished. I was really looking forward to this years Olympics.
    i am outraged at NBC’s monopolization of online viewing of Olympic events. Athletes have trained their whole lives and now I limited to mainstream broadcasts of them because NBC has blocked everything on the internet and mobile apps. I searched for “BBC Olympic App” and the result was “Did you mean, NBC Olympic App?” No, I meant BBC! This is a world event. This is bigger than you, NBC. I don’t know how you pulled this off, but it’s disappointing. This is how NBC will be remembered.

  7. Firmly agree with Travis and A.Eagle’s comments:

    NBC is blowing it big time. Thanks for not showing a live HD version of the opening ceremonies for the Olympics London

    My family pays for a big, overpriced cable package and the technology is so outdated on the user interface. my 70year old father couldnt find NBC in HD and eventually went to bed. He owns an iPad2 and it’s too bad there’s no streaming HD video. I’m working to get him to pull the plug on Cable, as I did years ago.

    Keep on the path you’re on NBC, notice your iPad app is rubbish….and hold on to that outdated business model! (per Travis’s excellent comment)

    verification with a cable provider is the equivalent of paying the Mafia for protection fees. This cable industry badly needs regulation to put an end to this media cartel in the US.

  8. Travis

    I’m hoping that this will be NCB’s last “failed experiment” with a Verification paywall.

    It utterly failed 2 years ago to the point that they had to drop it altogether for the men’s hockey about a week into the Olympics. They *have* the solution, just offer it up to us cord-cutters for a separate fee! They do that for the Tour de France (~5-6 hours per day for 3 weeks straight, $30). I’m not prepared to pay $100/month for 400 channels that I don’t watch.

    Just allow me to pay for what I DO want to watch (ie, the Olympics) and just be done with it. Stop trying to use the Olympics to prop up your outdated and overly expensive business model!

  9. Allison Engle

    Lazarus is simply wrong when he replies (in response to your excellent question, Staci, regarding the offer of a digital subscription, that he thinks verification with a cable provider is the equivalent of a one-time subscription purchase.

    I’m a cable customer who’s been trying for several days to log in to the NBC site, but keeps getting rejected.

    NBC has absolutely no customer service on that site (or anywhere else), and calling my cable provider to ask questions about this has put me on hold for nearly 4 hours now, and I’m no closer to an answer as to why Lazarus’ vaunted verification procedure is a complete bust.

    If NBC did what their smarter competitor, CBS, did during this year’s March Madness, and offered a one-time two-week long purchase of a streaming package for $20, $30, or even $40, I think the uptake on that would be phenomenal, blowing the top right off of that projected $55 million in digital revenue.