The Home of Investment Banking

The Tokyo Olympic and Paralympic Games: Was Hosting the Answer?


Japan’s economy used to be a thriving one. However, currently, Japan is going through what could possibly be one of the worst recessions, with the economy shrinking by 4.8% since the beginning of the pandemic.

That said, in 2013, Tokyo won its bid for the 2020 Olympics and Paralympics, and was due to host the games last year. The 2020 games were supposed to help heal the economy through its power as a global broadcasted showcase and the spending boosts that follow. However, the postponement of these games has only made matters worse for Japan.

Japan’s declining economy

Japan’s economy has been more historically stable than of recent. It experienced a period of great economic success in the 1980s due to the expansion of the tertiary industry and growth of manufacturing. However, this period of expansion quickly turned recessionary in 1992 when the economic bubble burst. Since then, asset prices fell and Japan’s real GDP growth slowed down to 1.7% – even for large industries that showed phenomenal growth, such as automobiles and electronics.  

Trends of decline are nothing new for Japan’s economy. Although it still holds the title of one of the most successful economies in the world, what was once a booming metropolis, has over the last few decades, become an economy predicated on deflation, low growth, and negative interest rates.  

And although Japan’s economy has shown signs of recovery throughout the second half of 2021, it continues to remain fragile, especially due to the rise in Covid-19 cases and government policies that ensue. 

Winning the bid for the 2020 Olympics and Paralympic games was supposed to be a much needed economic stimulus, bringing in tourists and sponsorships. However, the final blow was ultimately the disruption of the Olympics in light of the global pandemic.  

The postponement of the Paralympics has also taken a toll on Japan’s economy. Although the Paralympics only began this week, they do not have the same level of investment and have far less viewership compared to the Olympics. And, the lack of engagement with these games has highlighted the state of Japan’s weakened economy.

Indeed, despite the Paralympics’ growing popularity, the games are still not receiving the extensive media coverage that the Olympics are accustomed to. Moreover, the lack of overall viewership due to a rise in streaming services continues to cripple profits from hosting, thus increasing Japan’s economic losses.

Is hosting the answer?

To be blunt, not really. 10 years ago, hosting would have brought a much-needed economic boost to the Japanese economy. This year, it was not the case. Declining viewership is the first of many problems before the delay is even considered.

To put this in perspective, 3.9 billion and 1.85 billion watched the 2004 Athens Olympics and the Paralympics respectively. Popularity grew as 4.4 billion tuned in to witness the spectacular 2008 Beijing Olympics, and some 3.84 billion the Paralympics.

This increase of 13% for the Olympics and 107% for the Paralympics was a key indicator of growing public interest in the Games, disability, inclusivity, and television as a whole.

However, the 2012 London games’ viewership significantly declined by approximately 18% to 3.6 billion people for the Olympics and 3.8 billion for the Paralympics, and the viewer numbers remained stagnant for the 2016 Rio games.

Source: Statista

The Tokyo Olympics viewing figures show a 24% decline from the previous year, and the projected viewership for the 2020 Tokyo Paralympics is no different, with estimates standing roughly at 42% (around 2.4 billion).

Whilst this is an indicator that the public interest in sporting events and television is waning, there are also other factors at play.

For example, the average number of hours an American household spends watching television steadily increased from 1949 to 2010. The watch time per day peaked between 2009 and 2010 at nearly nine hours, but that number dropped 14% to just under eight hours seven years later.

Alongside the decline in traditional television’s popularity, Netflix has grown its subscriber base from 34 million in 2013 to over 207 million in 2021, increasing six-fold in eight years. Likewise, the most popular streaming service YouTube receives 70% of its traffic through mobile phones, raising user numbers from 800 million in 2012 to 2.3 billion in 2020, an almost three-fold increase.   

How Much TV Do People Watch? - The Atlantic
Source: The Atlantic

The battle for user attention is being won by the rise of streaming services, as the latter continue to funnel viewers away from television. A reason for this is that streaming services give viewers the freedom to choose the type of content they watch, at any time they choose.

Thus, to rebrand and rebuild the Olympics back to its former popularity, perhaps the viewing mediums for the Olympics must shift from traditional television to streaming services that have a growing audience, such as Amazon and Netflix. As the bulk of content consumption has transferred to mobile phones, allowing access to coverage from the most popular streaming services could bring a broader audience to the Olympic games and, in turn, boost the economies hosting the games.  

Concluding remarks

Ultimately, the short-term solution to Japan’s economic woes was met with an untimely global crisis. Due to the effects of COVID-19, self-isolation and the declining viewership of the games and television in general, hosting the games has so far been costing Japan more than what the country has earned thanks to them.

Furthermore, using the games as even a short-run solution to boost the economy could be deemed risky: the games were highly unlikely to solve the wider issues Japan faces – even if there had been no pandemic.

If the International Olympic Committee want to retain viewership and ensure their hosts continue to profit from the games, then the viewing mediums must shift from traditional television to streaming services, bringing a much wider audience to future Olympic and Paralympic games. 

More Articles