Olympic Winner: Online Video

The success of NBC and Yahoo in attracting viewers is showing advertisers the value of placing messages alongside Internet video

by Albert Sun

The most hotly contested Olympic battle? It's not between U.S. and Chinese gymnasts or Michael Phelps and those trash-talking French swimmers. Instead, the most intense rivalry stemming from this year's games may be between NBC and Yahoo! (YHOO), and it centers on who has the bigger online audience.

Yahoo's Olympics site averaged 4.7 million unique visits each day through Aug. 18, according to Nielsen Online. NBC, owned by General Electric (GE), had 4.2 million in the same period, says Nielsen, which tracks Web site traffic. Previously, NBC had used data from the same researcher to say that during the first week of the Olympics it outranked Yahoo by total users, page views, and the average amount of time spent on the site.

Olympic ad bounce

Who's right? The most recent figures give Yahoo a clear edge in terms of one of the most important Web metrics, unique visits. Still, NBC says users are spending more time on its site—15:50 minutes per average daily visit, compared with 6:49 minutes for Yahoo.

And NBC is smashing other Web-use metrics this time around. In the first 12 days of the Beijing Olympics, users of NBC's Web site had watched more than 56 million video streams—more than the combined total for the previous two Olympiads—Torino, Italy, in 2006; and Athens, Greece, in 2004.

However you slice the data, online broadcasts of the Beijing Olympics are making many people more comfortable with the idea of video online and helping to demonstrate to advertisers the value of placing their marketing messages alongside Internet video, especially for big sporting events. NBC's online video effort is "mainstreaming the fact that major sports events need a large place online because there is an audience for it, and there are ad dollars for it," says eMarketer analyst David Hallerman. He expects online video ad spending to surge 55.9% this year, to $505 million, in part thanks to the popularity of the Olympics online.

TV, here to stay

Yahoo is featuring short clips of interviews with athletes and other content, though not excerpts of actual events. Still, it's helping to draw viewers who may not otherwise be glued to the Olympics on TV or other Web sites, Yahoo says. "The type of content we're producing appeals to the casual fan," says Jimmy Pitaro, Yahoo VP for Sports and Entertainment. "Seeing the events live appeals more to the fans who are passionate about a particular sport."

And even NBC's site, chockablock with clips of prerecorded broadcasts and some live events, isn't in danger of replacing the network's 200 million-strong television audience any time soon. NBC has tried to keep Web viewership from cannibalizing its TV audience, partly by holding back some events until they've run on TV.

In his widely read blog, billionaire entrepreneur Mark Cuban says consumers want to view extended programming on a big TV, rather than a computer monitor. "If programmers understand that people will watch different programs on different platforms, we can stop playing the game of trying to replace TV," he wrote on Aug. 16. "Events look great on HDTVs, whether they are sports, shows, or movies. Quick hits and short clips are great for the Internet."

Microsoft silver

Appetite for those short clips has been a boon for Microsoft (MSFT), which owns the Silverlight technology NBC users have to download in order to watch video from the network's site. Silverlight is Microsoft's attempt to compete with Adobe's (ADBE) Flash player, up until this point the de facto standard for online video. "The quality of the video from the Olympics through Silverlight has been some of the best online streaming content yet," eMarketer's Hallerman says.

While some users may balk at installing the plug-in, and it doesn't support many older computers, many viewers have raved about the quality of its video. Microsoft has seen up to 1.5 million downloads of Silverlight each day of the Olympics, says Microsoft product manager Brian Goldfarb. The percentage of users with Silverlight installed before visiting has risen every day, Goldfarb said, and over 50% now have it pre-installed when they visit the site.

Microsoft's Silverlight will get the chance to prove its mettle again in Denver, where the Democratic National Convention plans to use the technology during its Presidential nominating convention, which starts on Aug. 25.

Until then, it will keep on helping NBC in its battle royale with Yahoo in Beijing.

Sun is an intern in BusinessWeek.com's San Mateo bureau.