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Olympics enter the '2.0' era

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  • 2008 Olympics will mark full online and on-demand video for first time
  • Rights holders will show up to 4,000 hours of Olympic competition online
  • Record online ad revenues in 2008 will be spurred by Olympics, analysts say
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By Kevin Voigt
For CNN
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HONG KONG, China (CNN) -- This year's Summer Olympic Games have been seen as China's coming-out party, destined to be as significant for the host country as the 1964 Summer Olympics in Tokyo were for Japan.

The state-of-the-art Main Press Center in Beijing readies for the Olympics this week.

In 1964 the Summer Games were seen as a touchstone for Japan's postwar generation and that nation's economic explosion onto the world stage. This summer's sports spectacular is being viewed by many in China and abroad as the Asian nation's step forward onto the same political and economic stage as the West.

The 2008 Beijing games will also mark this milestone: When digital media found their preeminent position at one of the world's most popular broadcast events.

"For us, the Internet has been the best news since television for the Olympic games," says Stéphane Kanah, head of digital media for the International Olympic Committee. "The Games is ideal for us because it has such a long tail."

For the first time, full online and on-demand video will offer unprecedented exposure to fans of sports that get scant air time on broadcast television.

"We tape 4,000 hours of events or about 200 hours per day -- there's no way that TV could handle that much content," Kanah says. "For example, in (the 2006 Winter Games at) Turin, on average only about 10 percent of the sports were shown -- that's 400 hours, which is still a lot -- but it also means 90 percent of the content wasn't seen."

No more. Exclusive broadcast rights holders in large markets in Europe, North America and Australia have plans to show thousands of hours online. Badminton aficionados in Canada and fencing fanatics in Australia will have as much access as track-and-field and gymnastic enthusiasts -- popular sports that generally dominate air time.

Also for the first time, live online video rights in some markets for the Olympics have been separately negotiated, not part of the overall "broadcast rights."

In China, the digital arm of CCTV was awarded Internet and mobile phone platform rights for the nation. I-Cable TV in Hong Kong will have four online channels with commentary in Cantonese. In Taiwan, Chunghwa Telecom expects revenues of US$12.4 million for broadcasting the Olympics via the Internet, mobile phone and Internet protocol television.

"Generally, we prefer a gatekeeper approach, with one rights holder in each market who can then sublicense viewing rights," Kanah says. Video Watch a tour of the main media center in Beijing »

"But (separating rights) is indeed a new approach ... since the rights to major markets were sold eight years ago, when things like video online weren't even happening. So now we are taking a case-by-case approach."

Internet is bonanza for cable TV firm

I-Cable petitioned the IOC two years ago to award a separate online contract for Hong Kong (the city's two terrestrial stations, ATV and TVB Pearl, jointly hold the broadcast rights for the Beijing games).

"The 2008 media rights were awarded (eight years ago), when the IOC wasn't even thinking about online media rights," says Musetta Wu, vice president of i-CABLE Sports Ltd., a subsidiary of i-Cable Communications. "I would say we contributed to (making the case for) separate digital media rights."

The contract is a boon for i-Cable, which provides cable television to 880,000 homes and broadband Internet to 306,000 subscribers in Hong Kong. The cable company has launched a free Web site that will have four channels of Olympic content. Two channels will stream live events -- one focusing on Chinese athletes from the mainland, Taiwan, Hong Kong and Macau, the other on international events -- and two channels with archived videos from earlier matches.

I-Cable has partnered with local WiFi provider Y5ZONE for free access to the games from 800 hotspots throughout the city.

"The advantage for us is that most of the matches will be during the daytime while people are at work ... these people will have easy access to stay up with the games online," Wu says.

I-Cable, which won't say how much it paid for digital broadcast rights, will cash in through online advertisement and sublicensing fees of Olympics content sold to mobile phone operators in the city.

"The benefits are long-term for us, because we have won both the broadcast and digital rights for the 2010 and 2012 games (in Vancouver and London, respectively), so this year will be a real-time rehearsal for the coming games," Wu says. "With the fast development of IT, digital media is definitely gaining importance as a vehicle for content delivery.

Bigger revenue potential on Internet

Indeed, online media are starting to generate cash. Sohu.com, the Beijing Olympics official portal, saw a 156 percent increase in revenue to US$84.8 million in the first quarter of this year. And the portal raised its advertisement rates 38 percent ahead of the games.

ZenithOptimdedia forecasts the Beijing Olympics will lift global advertising in 2008 to a record $183 billion, compared to $170 billion last year. Television still takes the lead, with a 38 percent share of Olympics ads, but the new media are growing nine times faster than the rest of the advertising market.

The IOC estimates advertising revenue from new media for the Beijing games is about 5 percent to 7 percent, "but we expect that to grow to 15 to 20 percent by 2014," Kanah says.

"It's still a fraction of our broadcast revenue, but it is the fastest growing," adds Perkins Miller, senior vice president of digital media for NBC Sports and Olympics, which owns the U.S. broadcast rights for the Beijing games.

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NBC has the most ambitious plans for online broadcasting, with 2,200 hours of live streaming and nearly the entire 4,000 hours of the games available for archived viewing.

"We believe strongly in this investment," Miller says. "This is what our audience demands, and what our sponsors demand."

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