For NBC, the Olympics are an experiment in streaming

In the not-so-distant past, only a few dozen hours of each Olympics were shown on television. Cable channels allowed more sports to be seen, but even into the 2000s Olympic broadcasts consisted mostly of track and field, gymnastics, swimming and a handful of other events.

It was not until the 2008 Beijing Olympics that NBCUniversal began showing thousands of hours of the Games online, solving a longtime problem of space by streaming competition on multiple platforms.

During the Tokyo Games, NBCUniversal says it will show 7,000 hours of Olympic coverage across two broadcast networks, six cable channels and several online and streaming platforms, in two different languages. (Understanding where to watch specific events — good luck with the official broadcast schedule — practically requires an advanced degree.)

The challenge of finding the right slots for programming has shaped the history of sports on television. It is why only the biggest regular season games in the N.B.A., M.L.B. and N.H.L. are on national channels, while the vast majority of games are on local channels. It is why ESPN operates nine — that’s right, nine — separate television channels. Until a few years ago, there was simply not enough room for all the sports that are being shown at any given time, and the Olympics condensed this year-round problem into three weeks.

By streaming, broadcasters can offer an infinite number of “channels,” with viewers limited only by the speed of their internet connections. However, while streaming the Olympics may be a boon for a fan of archery or badminton, who can now watch those competitions in their entirety, making it work for NBCUniversal is a much harder proposition.

NBCUniversal is doing the same dance all broadcasters are engaging in these days. Sports leagues and organizations want their competitions to be shown to the widest possible audience, meaning on broadcast channels like NBC, CBS and ABC. If the leagues can’t make it to broadcast, they’ll accept being seen on cable channels like NBC Sports Network and ESPN, which aren’t available in as many homes as the broadcast channels. Generally speaking, streaming services like ESPN+ and NBCUniversal’s Peacock are the last choice for those who organize games.

That puts media companies like NBCUniversal in an interesting position. They know that streaming is their future, but nearly every streaming service still loses money each year — and some lose hundreds of millions of dollars annually. So how can they prepare for the future while still earning money in the present?

For NBCUniversal, which paid about $12 billion for the rights to televise 10 Olympic Games in the United States through 2032, the Tokyo Games are a glorious opportunity to promote the year-old streaming service Peacock.

“Their hope for Peacock is that the Olympics will drive people to at least give it a test drive, and if they are lucky, it will create in some customers a habit of going back for episodes of ‘Saturday Night Live’ and all the other content that they have,” said Craig Moffett, a media analyst.

But sports aren’t ideal for streaming services because they have almost no replay value. Very few people want to watch a game again, or catch up on it the next day if they already know the result. Scripted shows like “Friends” and “The Office” still have immense value years after they go off the air. Sports programming does not.

It is also much easier to cancel a streaming service than a pay television package, so turnover among customers is higher. Sports fans are almost incentivized to sign up for a service, often through a free trial, watch the game or event they are interested in, then unsubscribe.

The conventional strategy then is to ensure that fans have to stay subscribed. It is no coincidence that ESPN launched ESPN+ largely on the back of the Ultimate Fighting Championship. Huge pay-per-view fights on ESPN+ bring millions of customers through the door, and the dozens of other U.F.C. events throughout the year keep them subscribed to the service, which is required if you want to see the biggest ones.

The Olympics cannot work that way. They flood viewers with sports for three weeks, then go away for two years. They might be able to attract tens of millions of eyeballs to Peacock, but they won’t be what keeps them on the service after the closing ceremony on Aug. 8.

NBCUniversal is offering a lot of programming on Peacock’s ad-supported free tier. It has built all sorts of Olympic dashboards within Peacock where one can watch highlights, replays, live coverage and medal tables. But very little will be exclusive to the service.

In the wide streaming landscape, Peacock is currently losing among its competitors.

Netflix has more than 200 million subscribers. Disney+ has more than 100 million. HBO and HBO Max have more than 60 million. Within sports-only streaming services, ESPN+ has 13.8 million subscribers.

As of March, Peacock had 42 million “sign-ups,” but only 14 million of those people watched regularly. NBCUniversal did not say how much advertising revenue it earns or how many paying subscribers it has. According to a report from The Information in February, Peacock only had single-digit millions of subscribers.

It is hard to imagine the Olympics changing that. “The vast majority of the Olympics programming on Peacock is going to be available for free and it’s ad supported,” Matthew Strauss, the executive in charge of Peacock, said last month.

They are putting live games involving the United States men’s basketball team on Peacock’s premium tier. But those games will also be shown tape-delayed on NBC. “For Peacock, we thought it was an interesting opportunity to learn,” Strauss said.

What NBCUniversal does not need to learn, however, is that the Games are an advertising bonanza, which perhaps better than anything else explains why the Olympics may not be a streaming game-changer.

NBCUniversal has said that it has already surpassed the $1.2 billion in advertising revenue that it earned during the Rio Games five years ago. Those games served up a profit of $250 million mostly from advertisers who wanted their commercials to appear in front of the 25 million people who watched NBC each night.

Putting some of the biggest events exclusively on Peacock — if that is even a possibility given the contract between NBCUniversal and the International Olympic Committee — would mean less advertising revenue, but perhaps more subscriber revenue. No matter what, NBCUniversal will learn, and its decisions will affect the way we watch future Olympics. NY Times