The US cash cow of linear TV – American football – isn’t delivering quite as much cash. The US’s National Football League (NFL) had one of its worst seasons in terms of ratings during the 2016 season that led up to Super Bowl. The Super Bowl is considered one of the biggest must-see live events for television each year, but the game last weekend didn’t deliver the kind of blow-out ratings that television networks have seen in previous years. In fact, the 2017 Super Bowl delivered the lowest ratings for the game in the last four years.
NFL commissioner Roger Goodell has been perplexed by the slump in ratings the league experienced in 2016, and the Super Bowl’s similarly lackluster performance. Goodell has cited several possible reasons for the lower-than-normal ratings – from political debates detracting from the games, to backlash against the kneeling protests, to a line-up of relatively uneventful games early in the season – but he misses the most obvious reason: changing viewing habits.
NFL ratings dipped 9% during the 2016 regular season, and were down 6% during the playoffs compared to the 2015 season, according to analyst firm MoffettNathanson. That’s part of a wider trend of slipping ratings experienced across linear TV networks.
Pay TV networks have been repeating the mantra that live sports is immune to changing viewing habits because live sports must be watched live. The theory that live television events will help bring in viewers has gained some steam in recent years – that’s why networks are now broadcasting live musicals – but 2016 delivered a powerful message about that: linear TV isn’t in vogue any more, no matter the type of content being aired – even if it is live.
Most live events saw lower ratings in 2016. The Rio Olympics ratings were down 17% over the 2012 London Olympics, and for viewers 18-49, viewership was down 25%. The Super Bowl drew 111.3 million viewers, according to Nielsen, which is on par with 2016’s Super Bowl viewership of 111.9 million, but both of those are down from the record-breaking 2015 peak audience of 114 million. Awards ceremonies – the other source of big, must-see live televised events – suffered ratings dips in 2016, too.
And perhaps most shocking to media world, ESPN suffered significant ratings dips, subscriber losses, and ultimately revenue declines in 2016. Parent company Disney revealed the top pay TV network ESPN saw year over year declines in advertising and affiliate revenue. Some estimate ESPN lost around 4 million subscribers during the year – despite Disney’s efforts to add ESPN to the new class of streaming pay TV packages such as Dish Network’s Sling TV and Sony’s PlayStation Vue. ESPN’s losses signal loud and clear that live sports doesn’t have the pull with viewers that it once did.
Despite the smaller audiences, live events still command impressive premium pricing for advertisers. NBC’s Rio Olympics, for example, generated a record profit for the network – even if ratings were down. Fox was able to generate satisfactory ad revenue from the Super Bowl, too. Fox sold media across digital and linear TV, charging up to $5 million for 30 second spots. For the first time ever, the game went into overtime, which gave Fox an extra four ad spots to generate some $20 million or so in extra revenue. Fox has generated an estimated $509.6 million in ad revenue from the game, according to iSpot.TV.
And while linear TV audiences are slowly shrinking, streaming audience numbers are predictably on the ascent. Nielsen estimates there were 1.7 million viewers streaming the game live, up from 2016’s 1.4 million. In fact, streaming numbers for the Super Bowl have steadily climbed each year since NBC was the first to live stream the game in 2012. During the Olympics, some 78 million unique viewers streamed the games in the US – a 24% increase in live streaming compared to the 2012 games.
In some cases, that trend has translated into higher prices for online ad inventory. NBC said it was able to charge 50% more for Internet-delivered ads than linear TV counterparts for the Rio Olympics. That’s because the coveted demographics for advertisers are streaming anything and everything now.
Networks have been steadily adding commercial breaks to broadcasts of live events each year, which may be another contributing factor to ratings slips. In 2016, NFL games had nearly 70 30-second advertisements; in 2015, games had nearly 68, and in 2012, games had 65, according to data from UBS; the Academy Awards ad load has increased 25% over the last five years, according to Kantar Media; and during the opening ceremony of the Rio Olympics, NBC received lots of flak from viewers complaining about too many commercials – though the company insisted there weren’t any more ads than usual.
But the Super Bowl is one of the few events where viewers are actually interested in the advertisements. According to TiVo’s annual Super Bowl report, engagements around commercials during the Super Bowl at times rivaled engagement with the gameplay. “For commercials, we’re looking for the biggest jump in viewership around the surrounding content – how well did that commercial hold the audience, compared to the program, the game itself, within the minutes that are on either side of the commercial,” said Joan Fitzgerald, VP of product management and business development at TiVo. “So those are really the most engaging events, they’re almost more engaging than the show itself in many cases, where there’s a real jump in viewership, where people stick with the commercial.”
According to TiVo’s analysis, the audience grew steadily throughout the game, with peak engagements occurring around commercials during the first half of the game, and with top game-related engagements occurring during the tense overtime. And Fitzgerald noted that the half time show garnered a larger audience than most of the rest of the game. “The halftime performance was the highest viewed part of the show, and based on the data from the past nine years, the half time show ranked third behind Madonna and Katy Perry,” Fitzgerald said. “This was a really big half time show.”
But perhaps the greatest irony here is that Super Bowl adverts are watched millions of times over online. In fact, online viewing and social sharing of Super Bowl ads is so rampant among viewers that brands typically now release their big game day ads days in advance of the actual broadcast, in order to rack up more views and buzz around the commercial and its message. So while linear TV’s reach is shrinking, Super Bowl commercials are still in high demand, even off the TV set.