When the No. 1 TV station of "sports-mad" Australia revealed its Olympics broadcast would wipe $50M from annual profits, it "was more than a warning for shareholders -- it was a sign that the business model of the Games was being shaken up," according to Kaye & Baker of REUTERS.
The outlook for Olympics broadcasters "has muddied, with declining viewer numbers for the 2016 Games likely to put pressure on television advertising rates for future events." Steve Allen, a former advertising buyer for Japanese agency Dentsu, who is now a consultant for the industry, said, "Instagram, Snapchat, YouTube, Facebook are all sucking the bejesus out of the market. They’re taking increasing shares (of the advertising revenue) and that share has to come from someone." An exodus of free-to-air TV viewers to social media alternatives like Twitter and Facebook "has undermined the ability of networks to recoup eye-popping Games broadcast rights costs, industry participants said." Seven West Media’s Aug. 1 warning that its outlay for this year’s Games broadcast "would help drive down fiscal 2017 earnings by up to a fifth was the latest symptom of malaise in free-to-air Olympics spectatorship." The numbers so far out of Europe "also suggest ratings for Rio are down on London, although broadcasters are reluctant to read too much into that due to the time-zone issue." A spokesperson for RAI said, "It would not be fair to compare the two. It would be like comparing a prime-time show to a morning one." One thing all agree on -- "more and more viewers are switching off their TVs and tuning into the Games through online streaming services, which do not command the same advertising rates as the old-fashioned box." Looking ahead, this rapid change in viewing habits "will force broadcasters and the IOC itself to review their business models ahead of Tokyo in 2020." Jessica Sjoberg, a spokesperson for MTG, which owns Swedish broadcaster Viasat, said, "A growing shift towards digital is just a reality that broadcasters need to adapt to ... by developing services and platforms that correspond to new viewing behaviors" (REUTERS, 8/20).
