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Streaming the Olympics: How CNTV and Neulion do it

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China always wins: What’s true for Olympic disciplines like diving also holds true for the online video coverage of the games — or any other worldwide sporting event, for that matter. Broadcasters like the BBC and NBC (s CMCSK) may clock record numbers with their live streams of the London Games, but their audience numbers will almost certainly once again be dwarfed by CNTV’s live streams.

The state-owned Chinese sports broadcaster is steaming a record 5,600 hours live from London, including an online re-broadcast of CNTV’s terrestrial feed as well as six to nine online-exclusive live feeds. It’s getting some help with its live streaming from New Jersey-based video platform provider Neulion. Neulion EVP Chris Wagner told me last week that the company is very excited about this unique challenge: “The numbers are staggering,” he said of China’s huge online audience.

And staggering they are: When CNTV streamed the World Cup in 2010, as many as 5.5 million people tuned in simultaneously. That doesn’t just represent the biggest simultaneous audience for a sports live stream ever, it also set a record for P2P live streaming, which CNTV has been using to deal with both bandwidth costs and network reliability issues.

However, for the London Games, CNTV will be augmenting its own P2P live stream with centrally delivered streaming from Neulion to target mobile and tablet viewers as well as desktop users in search of a better-looking HD stream. Neulion is powering an offering called 5+ VIP, which is marketed as a premium take on the Olympics, complete with mobile apps for iOS(s AAPL) and Android(s GOOG) devices.

“The mobile piece is gonna be pretty significant,” Wagner told me, which is why the company doubled down on that part of the offering. On the iPad, Neulion serves a total of eight different bitrates, up to 2.5 Mbps for its HD stream. iPhone bitrates are ranging from 150kbps to 640kbps, and Android devices will get similar bitrates. On the desktop, Neulion is using Flash(s ADBE) to deliver streams with up to 3Mbps.

Neulion’s 5+ VIP offering also comes with DVR-like functionality, the ability to view any scene in slow motion and picture-in-picture features to monitor up to four live feeds at the same time. Neulion built the mobile apps as well as the Flash player experience for CNTV, and it is using its own H.264 encoding software to capture the games. “We’ve got an end-to-end responsibility,” Wagner said about the role his company played in delivering 5+ VIP to consumers.

The question is: Why are Neulion and CNTV investing in this kind of premium offering? First of all, users don’t have to pay for 5+ VIP — yet. Wagner told me that Neulion is using the service to sign up customers, and that it hopes to target these very same customers with future sporting events, which it may eventually charge for. The hope is that as iPad and smartphone ownership grows in China, so does the willingness to pay. “The market is looking for more premium products,” Wagner said.

Also check out our previous coverage: