NBC Sports Chairman Lazarus: London Olympics are a ‘grand experiment’

Mark Lazarus is no stranger to big sports events but the 2012 Olympics trumps them all. Lazarus, the chairman of NBC Sports Group, joined NBC Universal(s cmcsk)(s cmcsa) as part of the Comcast merger, becoming chairman of the NBC Sports Group more quickly than anyone imagined when sports broadcast legend Dick Ebersol opted out just after the 2011 upfront. Ebersol is in London as an advisor but Lazarus is in charge of NBC’s Olympics. We caught up by phone Wednesday while he was at NBC Olympics headquarters in London. Here are a few highlights from our chat about digital strategy, the latest revenue numbers, authentication, metric goals, the heavy commitment to live streaming and more:

On digital revenue

paidContent was first to report NBCU’s $25 million in digital revenue for Beijing and that the network was more than doubling that revenue for 2012 to $55.5 million, based on $900 million in overall ad revenue. NBC announced Wednesday that it has passed the $1 billion mark in ad revenue and digital revenue rose with it. Lazarus told me six or seven percent of that is from digital. The new number is more than double that of Bejing, about $60 million, and if it winds up on the higher end, will be nearly triple. It’s small compared to the overall revenue number — but serious.
Lazarus calls it proof that advertisers not only want linear on broadcast and cable, but also online and mobile. The bulk of that is from desktop or laptop; mobile continues to be the least monetized, he added.

On streaming

In previous years, NBC has been both willing to experiment and uncomfortable giving full live access to the kind of events that would be in the prime-time spotlight. NBC offered 2,200 live hours from Beijing and only two events — curling and hockey for Vancouver, about 400 hours. The barrier to watching events that were being offered live in other countries drove Olympics fans crazy. For London 2012, NBC is going all in. I asked Lazarus if that was a decision he inherited or one he made.

“We made those decisions when I got into the role. They had a working plan that was not as ambitious as it sounded. We had a straw-man discussion about how people were consuming media and watching the games — and we made the decision to stream everything live.”

The reasoning? Lazarus explained: “There are a certain number of fans who want the immediacy of watching it live. Since most of it will have to be authenticated or verified, it brings value to our cable and satellite partners.” Plus, he believes “people will still gravitate to our primetime programs.” That’s not just a gut feeling. “All the research we’ve seen and all the trends in the industry show that putting things more out there leads to greater and wider interest.” He expects the live streams to lead to more buzz and energy for primetime, not detract from it.
“The Super Bowl is a good example. It was the biggest digital event with 2 million uniques and 750,000 on concurrently — and also the most watched television show of all time. Of those 2 million uniques, 1.6 million were watching television while having a digital experience.”

On authentication/verification

Why keep most programming on over-the-air NBC behind an authentication wall? The vast majority of NBC viewers watch via cable or satellite operators paying for rentransmission consent.
What about people who don’t pay for broadcast access? Of 114 million television households, Lazarus says roughly 100 million are cable or satellite subscribers. “Maybe 14 million don’t pay,” he added. “When you’re doing 5,500 hours live, if there’s five or 10 percent [of streaming programming] you don’t need to verify, that’s a whole lot of hours.” That would be 250 to 500 hours.
“We also have more Olympic coverage on free TV than ever before ever before –270 hours.” So cordcutters will have some streaming access without doing backflips and those who don’t pay for TV will be able to watch some of the Olympics on their sets.
The time delay made it even more important to Lazarus and company to provide the live streams.
NBCU is pushing all of its primetime Olympics viewing to NBC. The other channels set for multiplexing during the day — NBC Sports Network, CNBC, MSNBC, Bravo — will have their regular programming. “During the day we have a lot of options for people but there’s a lot of content. In prime time, the only place to watch the Olympics will be NBC.” (Well, the only legal place. I’ll bet digital dollars to your digital donuts that some people will spend a lot of time trying to watch through other means.)
Why not offer a digital subscription? “We think the verification process is that form of payment,” Lazarus said. “We don’t think they should pay twice.”
What would he tell peers making similar decisions about whether to go the authentication route?“We all have our own business models. We each have different events we do our own ways. As an industry, we have to push to simplify verification so our customers can consume all this. Let’s make verification easier for the consumer — as an industry.”

On social media

In recent days, NBC has announced partnerships with Twitter, Facebook, Storify and more. I asked if there is any incremental revenue in the Twitter or Facebook deals or is it all about marketing? Lazarus was quick to reply: “Marketing; it’s not a revenue play for us. We’re using them to market and promote the games, to personalize, make a connection. We have a unique opportunity to utilize some of the biggest talents in the world of sports, in some cases, entertainment and news … In a way it’s a personal plea — even though it’s one to many, you sort of feel it’s one to one.”
For Lazarus, it’s all a work in progress:

“This is a grand experiment. This is a billion dollar laboratory. We’re playing with a lot of things for the first time and on this scale.”

On success

How will Lazarus gauge success? “The overall measure for me for success is more than 200 million Americans watch some portion of the Games, which would make it a top five American all-time event.”
He also would like to surpass the Beijing digital assets by 50 percent and on mobile, would like to have a significant number of people use the smartphone and tablet apps.
“Some measure is making all of this technology work together. Looking at total uniques and page views and how many streams, we think we’ve got enough technology… if we’re pushing the limits, that will be a success.”
Was there anything you couldn’t do with digital? “We’re streaming more content, more simultaneious streams than ever before. We’re challenging the technical limits. It’s not about what we couldn’t do. it’s about focusing on delivering.”