March Madness: Bad for Business

Along with the usual office pools and trash talking over rival teams, this year's March Madness comes with another major distraction: free live streaming of every game. For the first time the NCAA has teamed up with the CBS to provide March Madness On-Demand, a completely free Web stream of all 63 basketball games. Fans are eagerly signing up; fans had registered for 96 percent of the premium VIP spots--which CBS says will get fans quicker access to streaming video--by mid-day Wednesday.

Streaming NCAA games online isn't new; CBS has been doing it since 2003 when they debuted that year a pay-per-view model. In 2005, they netted about $250,000 in revenue using that system. This year's free, ad-supported model, supplemented by premium services, should earn the network "more than $21 million in total revenue," CBS President Les Moonves projected during a recent earnings call with analysts. That's despite the fact that operating costs for March Madness On-Demand have remained largely flat, according to Moonves.

But CBS's gain may be corporate America's loss. March Madness is already a big draw in the workplace; most surveys show that roughly 10 percent of Americans are interested enough in the tournament to participate in an office pool. But checking up on pools and touting one's team to a colleague takes only a few minutes here and there. Full desktop PC access to hours and hours of back-to-back games could prove a much greater distraction.

So as the first games hit the air Thursday afternoon, how much will workplace productivity suffer? "The U.S. has led the world in productivity over the past few years in how much an individual worker gets done," says Rick Cobb, a vice president at Challenger, Gray & Christmas, a consulting firm specializing in workplace issues. "As a result we have allowed the personal life and work life to blend, whether that means doing some Christmas shopping online at work or watching a basketball game."

According to Cobb, March Madness distractions could cost American companies about $1.7 billion in lost productivity. "It's certainly going to impact ability the concentrate," he says. Cobb is the first to admit the figure is not the most scientific; its based on the estimated number of workers expected to participate in pools, the money they earn and estimates 10 minutes wasted each day on March Madness-related activities. That 10-minute figure is largely a guess, Cobb says. And its also unclear whether those 10 March Madness wasted minutes would have actually been spent working diligently or, say, playing Scrabble online - workers could just be substituting one time wasting activity with another. These shortcomings have led some to question the study's validity.

But Cobb thinks the larger productivity issue with free streaming video is the potential overload of companies' bandwidth. According to statistics from CBSSports.com, nearly 1.4 million unique users visited the site in 2007 and watched, on average, 1.9 hours of live video. Those numbers are certain to jump this year, a leap in traffic that could conceivably crash an office server. "When servers go down, most people want to head home because they are so computer-dependent," Cobb says. "It essentially halts productivity."

To prevent major server crashes—or major productivity downfalls—Claire Simmers, author of "Personal Web Usage in the Workplace," says employers should not try to enforce a strict no-tournament policy, because employees are likely to waste more time trying to get to blocked Web sites. Besides, employers risk building up a fair amount of resentment. "You have 55-year-olds trying to hide what they're doing at their desk. It's like being a little kid trying to read at night when they're not supposed to have their light on," says Simmers. "It creates a relationship like a parent and a child."

Instead, the best thing employers can do is to allow employees to take a break and stream a game, as long as they can manage their work. She recognizes that workers will likely spend office hours streaming games, but that doesn't necessarily equate to a drop in productivity. "A lot of it is about flexibility," says Simmers, who teaches at St. Joseph's University's business school, in Philadelphia. "If someone wants to watch a game, maybe they can take a two-hour lunch break today and no lunch break tomorrow. If they are willing to spend 85 hours working the week before, and get everything done, so what if they are watching a basketball game?" Any fan with that commitment, she says, has probably earned the right to watch a game—and, if they're lucky, a win.

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