This may be the lowest-rated Olympics ever. NBC shouldn't sweat it

New York(CNN Business) The Summer Olympics — one of the most-watched events worldwide — officially kicks off in Tokyo this weekend.

After being delayed a year because of the pandemic, NBC hopes pent-up demand will drive sports fans to their TVs, laptops and phones to tune in. But traditional TV viewership of this year's games faces a set of challenges that could land the Tokyo Olympics in a ratings hole.

"This is probably going to be the lowest-rated summer Olympics of all time," said Patrick Crakes, a former Fox Sports executive turned media consultant. "They can't avoid the increased media fractionalization that's enabling everyone to spend more time with all sorts of content."

The good news for NBC is it doesn't need to rely exclusively on old-fashioned TV ratings to make money on the Olympics.

Streaming and digital platforms provide viewers with more ways to watch the Olympics than ever — live events, highlights, interviews, stories and other shareable clips. That's why this Olympics could see its viewership fall to a record low in the traditional TV sense yet still reach more eyeballs than ever.

"I think we could see that its reach across all platforms was bigger than any Olympics that came before," Crakes said.

Bad news: TV ratings are down

The decline in TV ratings isn't new: TV viewership for the 2016 Rio Olympics fell roughly 18% from the 2012 London games. But the proliferation of TV shows, film and other content across multiple platforms has accelerated markedly since then.

"All linear television is down," noted Jay Rosenstein, a former VP of programming at CBS Sports, who expects Olympics ratings to tumble again.

The TV world is vastly different than it was just five years ago. Viewers now have multiple viewing options — from social media to streaming services.

Just think about the number of streaming services that have launched in the last year alone.

NBC wants excellent ratings, because if the numbers drop too much, it could force the network to compensate advertisers for lower-than-expected viewership with free ads later. (That's known as "make-goods" in the TV business.)

With viewership for other ratings drivers (like award shows) dropping sharply, sports are now even more important to networks and advertisers.

Bad news: Covid

The other unique issue facing these Olympics, of course, is that they're taking place in the middle of a pandemic. The games have already had to deal with whether they should even be held and news that a growing number of athletes have tested positive for the virus.

But from a TV standpoint, the biggest issue is that the games have no spectators. Bob Costas, the legendary sportscaster who fronted 11 Olympic games, told CNN earlier this month that the absence of fans makes for "a hell of a challenge."

"There's no substitute for fans," said Rosenstein. "Think of swimming, the screaming that takes place when they're dealing in hundredths of a second to the touch and how loud that can get and how enthused it gets you at home. Absolutely, fans matter."

The NBA Finals, for example, was down compared to two years ago, but rebounded in a big way from last year, which took place in a bubble without fans.

Good news: NBC knows what it's doing

That doesn't mean that the Olympics can't break through.

"What NBC has to do, and which they do so well, is they weave a tapestry in prime time where you get to experience the lives of these athletes and watch their performances and identify with their country or with themselves," said Rosenstein.

NBC has said that it plans to have 7,000 hours worth of Olympics coverage across broadcast TV, cable and streaming.

The Olympics are also a news event as much as a sporting event, so how NBC balances the story of the competition and the story of the health crisis will likely matter to viewers as well.

"If NBC doesn't pay enough attention to Covid, then it looks like they are denying reality," Lee Igel, a clinical professor at NYU's Tisch Institute for Global Sport, told CNN Business. "However, bringing Covid too much into the discussion and you could alienate viewers who are tired of the pandemic and want to watch the Olympics for the glory of the games. How the broadcast balances that will be something to look out for."

Good news: Peacock

NBC also can use the event as a two-week advertisement for its streaming service, Peacock.

In fact, the original 2020 plan was for Comcast's NBCUniversal to introduce Peacock last summer in conjunction with the Olympics. The pandemic put those plans on hold, so now Peacock — which is vital to the company's growth — gets its moment to shine.

"It's an enormous piece of leverage for people who want to experience it or sample it or watch it," Rosenstein said.

Peacock is offering live games and content including men's and women's gymnastics and men's and women's track and field.

Whether the Olympics leads to people actually signing up for Peacock is yet to be seen, however.

Good news: Sports drive ratings

Even if viewership numbers are down for the Olympics, ratings will still be higher than pretty much anything else on TV this summer, because live sports typically dominate viewership.

So, yes, NBC wants gangbuster ratings for the games — to which it's committed billions of dollars over the next decade — but if it doesn't get them it's not necessarily the end of the world.

"The Olympics are the Olympics," Rosenstein said. "They're one of the most most popular events in the world, and their engagement will continue to be significant, one way or the other."