The Olympics Deliver a Blow to Netflix

Procera Networks reports that streaming traffic on Netflix has fallen by 25% in recent days (reported on CNN Money website here).  The company believes that the Olympics accounts for the decreased activity on Netflix.  Indeed, Netflix has admitted that the Olympics may have an adverse effect on the firm this quarter.  I'm curious as to the financial impact, as less streaming on the part of someone who still pays the monthly subscription fee doesn't have a negative impact on Netflix earnings.  On the other hand, if the Olympics slows new subscriber growth, then the company has a problem.

This report makes me wonder what other firms might be adversely affected by the Olympics.  Will Redbox take a hit as well?  What about movie purchases and rentals via iTunes?   Do people go to movie theaters less often during these two weeks?  Perhaps sporting events such as minor league baseball take an attendance hit as well.  What do my readers think?  Any thoughts on the firms that might have a nasty financial surprise this quarter due to the two-week Olympic effect?

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Do Olympic Sponsorships Make Sense?

Knowledge @ Wharton has a special report on Olympic sponsorships this week.   Do these sponsorships make economic sense?   Some experts argue that sponsorships don't offer an immediate benefit, but they have a positive long term effect on brand equity.   That may be the case, but hopefully, firms would experience beneficial short term effects as well.  Unfortunately, that may not be the case. University of Nebraska-Lincoln Professor Kathleen Farrell and her co-author W. Scott Frame conducted a study of the impact of sponsorships on the market value of firms.  They found that stocks tended to fall slightly during the period in which firms announced that they were sponsoring the 1996 Olympics. 

Perhaps even more interesting are two reports by marketing firms.   Gallup and Robinson found that most people cannot identify the official Olympic sponsors.   Another report by marketing agency Jam found that Nike was the brand most mentioned by consumers as an Olympic sponsor, but the firm actually is not sponsoring the London Olympics! 

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The Olympics: Who is Happier? The Bronze vs. the Silver Medalists

Stanford Professor Bob Sutton has a terrific blog post today about the Olympics.  He asks:  Are the bronze medal winners happier than the silver medal winners?   He cites a study by Vicki Medvec, Scott Madey, and Tom GIlovich.  They examined the emotions of medal winners at the Barcelona Olympics (using videotape).  Naturally, gold medal winners were ecstatic.  However, they found that bronze medal winners displayed more positive emotions than silver medalists.   According to Sutton,

"The researchers proposed that this finding is driven by what is called "counterfactual thinking," those thoughts of what might have been if something different had happened.  In particular, they proposed that silver medals did upward comparisons to the gold medal winner, while the bronze medalists did downward comparisons to people who didn't win medals"

Sutton also points out that expectations play a key role here.    Of course, a bronze medalist who expected gold won't be very happy.   However, a bronze medalist who wondered whether they would win any medal at all will be quite thrilled.  I'm intrigued by the research, and I'll be watching the emotions of the Olympians from here on out... watching to see if this research finding holds true in London.

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