Sponsors gain as Olympics post big TV numbers

Skepticism about the size of NBC's audience had many sponsors wondering if they'd get their money's worth. But the real threat may be the Internet.

By InvestorPlace Feb 16, 2010 10:22AM

A number of large marketers like Pepsi (PEP) have stayed away from the Winter Olympic games. Nielsen numbers showed Saturday viewership was as high as 27 million households on the NBC network, while 32 million people watched the opening ceremony.

Some of the most popular programming, like hockey and downhill skiing, is still to come. In other words, Pepsi may have made a mistake.

USA Today reported that NBC may dodge the fate that most experts expected for the network. Early reports were that the General Electric (GE) division could lose tens of millions of dollars on the $820 million investment it made in the games. It now appears that the network has a chance to break even.

The Worldwide Olympic Sponsors who support the games throughout the year probably took the smallest risk by their involvement in the Vancouver games. Almost all of these have huge budgets so they put only modest sums, by their standards, of their money into the pot. This includes mega-marketers like Coke (KO), General Electric, Visa (V) and McDonald's (MCD). The official sponsors and suppliers of the Vancouver Olympics themselves take a greater risk based on TV ratings and attendance. Some of these companies, like 3M (MMM) and Ricoh, have more modest advertising budgets.

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The real threat to the games and the companies that underwrite them may be the Internet, both during the games and in the future when digital access to live video will increase. NBC has its own Web site, but the Dutch site Nos also has video Olympic coverage as do several other sites based outside the U.S. File sharing site MyP2P has live streams which bypass the NBC coverage both on the network and online.

Making money with snow at the Olympics? Check out this video. Post continues below video.

And, of course, there is always Google's (GOOG) YouTube, the most visited video site in the world. NBC is the primary sponsor on YouTube's home page for much of the time that the Olympics are on TV. But, there is plenty of content at YouTube that NBC would not want to see in the public domain. Several clips of the death of a luger made it onto YouTube only to be taken down. In among promotional tapes from major sponsors are clips posted by YouTube users, clearly without the permission of the network or the Olympic committee.

This year's Winter Olympics began with media skepticism about the size of the NBC TV audience and whether sponsors would get their money's worth. And they may end with the question of whether network television's access to a global audience will eventually be compromised by pirated content and the Internet as a way to bypass traditional programming.

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