Streaming the Olympics: A game-changer for online video

Olympics online video streamingThe numbers are in: The 2012 Olympic Games were not only the most watched television event in U.S. history, with 219.4 million total viewers and an average of 31 million viewers each day; they also set records for online viewing, recording nearly 2 billion pageviews and 159 million video streams of events during the Games.

If reports from independent research firms such as Pew Research hold weight, it's possible that eight out of ten Americans (about 78 percent) "watched or followed Olympic coverage either on television, online or on social networks."

The numbers are impressive, and the Olympics may have had a game-changing effect on the online video space.

What did Olympics streaming do for online video?

Live streaming of the Olympics by NBC Sports led to a temporary shift in what the majority of Americans were watching online.

Online viewers of both live and recorded Olympic events not only shattered previous event viewing records but even set Netflix (Nasdaq: NFLX) back on its heels, for at least one day. According to DSL Reports, Netflix viewing on Sunday, July 29 was down 25 percent.

However, that first Sunday's big drop didn't continue into the week, according to network policy enforcement and analytics provider Procera.

"(W)e are finding that there are regional as well as size variances with the peak Netflix consumption," noted Procera Vice President of Global Marketing Cam Cullen. "An East Coast site showed a significant drop in Netflix peak rates (the totals show are the peak rates for each day). However, a West Coast site showed very little variance in Netflix during the entire Olympics run. The interesting fact about both sites is that the total video consumed across all sites does not increase at all, with all types of video (Netflix, YouTube, HTTP Media Streaming) remaining proportional across all sites."

Procera Netflix ratings East coast Procera Netflix vs. Olympics west coast

East coast vs. West coast peak rates, July 22-Aug. 9. (Images courtesy of Procera)

Procera measured usage on specific networks participating in its measurement survey.

For a content provider that takes up well over 30 percent of all U.S. bandwidth, the drop is notable--but it's unlikely that another online video event will challenge Netflix's dominance of the pipes this year or next so dramatically.

How did the numbers stack up?

Some 153.4 million videos and 20.4 million hours of video were streamed across computers and smartphones, doubling the amount of streaming video during the Beijing Olympics. More than 64 million of those videos were live streams, a 353 percent increase over 2008.

By Sunday, Aug. 12, during the closing ceremonies, 9.9 million mobile devices had been verified by NBC--perhaps the most device verifications for a single TV Everywhere event so far, NBC speculated in its official release.

NBC offered free access to some Olympics clips, but authenticated cable subscribers could view the entire event live through either their PC or their smartphone.  

NBC Olympics unique users

NBC Most watched Olympic live streams

Charts provided by NBC Sports.

How people used online video

Pew Research Olympics coverageProcera noted on July 31 that over the first two days of the Olympics, including the opening ceremony, online network traffic peaked as high as 34 percent of several providers' overall bandwidth, while volume soared over 100 percent. However, the number of subscribers jumping onto streaming events didn't increase as dramatically.

"The percentage of subscribers consuming the Olympics streaming from NBC seems to be holding steady at ~2%," Procera's Cullen blogged on Aug. 2. "On several cable networks, Wednesday's peak levels for streaming were 50% higher than Tuesday or Thursday (with the key events on Wednesday being a Michael Phelps-Ryan Lochte matchup and the men's gymnastics completion)."

In an earlier post summarizing the first weekend's numbers, he wrote: "Since we did not see a huge rise in the percentage of subscribers participating in the streaming events, this translates into longer streaming sessions and more sessions for each subscriber."

Pew Research Olympics on social networksThat early observation appeared to hold true throughout the Games. NBC's final tally of online video viewing noted that users averaged 111.4 streaming minutes per viewer on the Web, and 94.3 streaming minutes per viewer over one of its two streaming apps: Live Extra or NBC Olympics. And PC users spent an average of 30 minutes per visit on, well up from 2008, when 12.3 minutes was the norm.

Will the Games pay off financially for NBC?

Possibly. According to Bloomberg, NBC revised its projected $200 million loss, saying it now expects to break even. Either way, the network will end up ahead of where it was after the Beijing Games, where it recorded a $223 million loss.

NBC says it was the much-maligned tape delay broadcasts to U.S. audiences that brought up revenues, thanks to increased ratings. That's hard to argue, with final ratings in.

NBC paid $1.18 billion for the rights to broadcast the Games in the United States. It shelled out an estimated $100 million in production costs as well, bringing its costs to $1.3 billion. With approximately $1 billion in ads booked by the start of the Games, AdWeek speculated on Aug. 13 that the broadcaster would even see a small profit.

Technology and tectonic shifts

Beyond the raw numbers lay some interesting tidbits about how NBC was able to deliver its online video without melting down the Internet, as some critics predicted would happen. While some viewers complained of slow connections and lag, many had no complaints about the quality of the video being streamed to their PCs or devices.

YouTube's partnership with NBC to deliver live and recorded video streams may have been a coup for the Google (Nasdaq: GOOG)-owned service. It also partnered with the International Olympic Committee to stream events to 64 additional countries in sub-Saharan Africa and Asia. Both presented a huge technical challenge for YouTube, which clearly can parlay that experience into future large-scale live streaming ventures.

Procera IPv4 vs. IPv6 Olympics

IPv4 access vs. IPv6 access (the red sliver at top) to via ISPs monitored by Procera.(Image source: Procera)

Also of interest was Cisco's (Nasdaq: CSCO) efforts during the Games. The manufacturer, whose Videoscape platform was in use by NBC to deliver live and on-demand programming from the event, supplied Apple (Nasdaq: AAPL) iPads to key NBC customers who were attending the Games in London, as a way to showcase Videoscape's multiscreen capabilities. The hope, clearly, was that customers--some of whom may have been executives from major cable operators--would get a firsthand look at Videoscape's capabilities.

Online users also accessed the streaming Games via IPv6, Procera noted. "It is interesting to know that a small percentage of the streaming traffic (less than 1%) is IPv6, which is consistent with the levels we saw in the World IPv6 Day in June. The fact that the streaming is available via IPv6 is a big step forward, and the fact that at least some users are consuming video over IPv6 is also a big win."

No matter how one looks at it, online video's part in presenting the Olympics changed from being an accessory to primary television coverage, to an almost-essential part of the viewer's preferred experience.

"This was the beginning of a tectonic shift in TV viewing," wrote Jim Barthold in a FierceIPTV commentary. "Everybody has talked about TV Everywhere but it's been limited to what TV content owners wanted to show everywhere and what platforms were available. The Olympics were, literally, TV Everywhere. They showed that if you sufficiently hype an event and throw it on every available media the public will come and watch."

Will NBC and other content providers take the baton and continue the forward momentum that 17 days of Olympics coverage brought to the online video world? That remains to be seen, but we shouldn't have to wait too long to find out.

Streaming the Olympics: A game-changer for online video