80/20 Rule for TV Ratings: Why Sports Matter

According to TV ratings firm Nielsen, in 2023, the National Football League accounted for 93 of the year’s 100 most-watched TV shows in the U.S. market.

That’s a good example of the 80/20 rule, formally known as a Pareto principle, which suggests that 80 percent of consequences come from 20 percent of causes. 

More than a third of U.S. broadcaster NBC's viewing time in 2023, for example,  was attributable to NFL games and related programming, according to analysts at MoffettNathanson. CBS was even more dependent, at 40 percent. And at Fox, NFL games and other "shoulder programming" accounted for 63 percent of the time viewers spent with the network.

Beyond the NFL, sports programming drives a disproportionate share of revenue. 

Broadcaster	Top 20% of Programs (Revenue)	Remaining 80% of Programs (Revenue)
ABC	Major sporting events (e.g., NFL, NBA Finals)	Other sports programming, general entertainment
NBC	NFL, Olympics, Premier League	Other sports programming, general entertainment
CBS	NFL, NCAA March Madness, PGA Championship	Other sports programming, general entertainment
FOX	NFL, NASCAR, MLB postseason	Other sports programming, general entertainment

More significantly, National Football League revenue and profit also showed a Pareto distribution. in all cases, a relatively small percentage of programming time (five to 10 percent) is responsible for a disproportionately large percentage of profits (25 to 40 percent).

Network	Program Time %	Profit %
ABC	5	25
NBC	7	30
CBS	8	35
Fox	10	40

And that pattern has been in place for a while. 

source: Sportico 

That heavy draw of NFL content also suggests some potential churn issues for linear or video streaming firms showing NFL content, namely the danger of annual cycles of churn, as football season ends. 

Of course, there are other sports happening at other times of year than the NFL, but those sports do not have the drawing power of the NFL. Of course, once every couple of years there is an Olympics telecast that is highly viewed, but that event does not provide an annual or season-long upsurge in viewing. 

Cell Network Physics

Physics plays quite a large role when designing and operating a mobile network, considering the effects of radio signal frequency, reach, data capacity, modulation technique, cell size and cell use patterns. 

Since the time of first-generation analog cellular services, the amount of spectrum devoted to mobile service has both increased and moved higher in frequency, as this chart illustrates. All of us are familiar with at least some elements of higher-frequency spectrum. 

The 800-MHz radio waves used to support 1G networks were pretty good at penetrating walls. By the time we get to 4G, using spectrum up around 2 GHz, signals have limited ability to get through walls. In the 5G era, using resources up to about 4 GHz to 6 GHz, signals are directional, and will not get through a plant leaf. 

source: Keysight Technologies 

So all sorts of signal processing has to be used to create multiple paths for those signals, to get around the line-of-sight propagation pattern. 

Another issue is that radio signals at higher frequencies, using power levels common for cell networks, will not travel as far as they do when launched at similar power levels but using lower frequencies. 

That means smaller cells must be used, and that accounts for the increasing importance of optical fiber distribution networks, a trend that will continue as we continue to move up in frequency for subsequent mobile generations. 

The other beneficial aspect of higher-frequency radio waves, however, is their capacity. Radio signal frequency and capacity are directly related: the higher the frequency, the greater the capacity. 

So both smaller cells and higher frequencies mean the amount of bandwidth a mobile network can supply will increase dramatically. Looking only at frequency, frequencies in the 24-GHz range have two orders of magnitude more physical capacity than 800-MHz signals. 

source: IEEE 

Modulation schemes add more capacity. Looking only at quadrature amplitude modulation, the number of bits we can encode per symbol increases capacity, all other things being equal (channel size, for example). 

source: Microwave Link 

Smaller cells also help, by intensifying the degree of frequency reuse possible in any geographic area. All other things remaining equal, shrinking cell radius by 50 percent quadruples the total number of cells. 

source: Slideshare 

But those are techniques used on mobile networks alone. These days, mobile data traffic also can be offloaded to fixed networks when users connect their mobile devices to Wi-Fi. In the 5G era, perhaps as much as 70 percent of mobile data traffic actually is offloaded to fixed networks in the form of Wi-Fi access. 

source: Spectrum Futures

The other interesting angle is that mobile network traffic shows a Pareto distribution. About 75 percent of total traffic occurs on just about 30 percent of cell locations. 

source: Spectrum Matters  

Practical Implications of Pareto, Rule of Three, Winner Take All

Any market researcher, studying any particular market, will tend to find something like a Pareto distribution often applies: up to 80 percent of results are produced by 20 percent of actors. Some might call that the rule of three. 

Market share structures in computing, connectivity and software tend to be fairly similar: leadership by three firms, corresponding to the rule of three. 

“A stable competitive market never has more than three significant competitors, the largest of which has no more than four times the market share of the smallest,” BCG founder Bruce Henderson said in 1976.  

Codified as the rule of three, the observations explains the stable competitive market structure that develops over time, in many industries. 

Others might call this winner take all economics.  

Consider market shares and installed base in the U.S. home broadband market (including small business accounts). Of a possible total installed base of 122 million locations, 90 percent of the installed base is held by 15 companies. 

Just two firms have 52 percent of the installed base of accounts. 

Broadband Providers	Subscribers at end of 2022	Net Adds in 2022
Cable Companies
Comcast	32,151,000	250,000
Charter	30,433,000	344,000
Cox*	5,560,000	30,000
Altice	4,282,900	-103,300
Mediacom*	1,468,000	5,000
Cable One**	1,060,400	14,400
Breezeline**	693,781	-22,997
Total Top Cable	75,649,081	517,103
Wireline Phone Companies
AT&T	15,386,000	-118,000
Verizon	7,484,000	119,000
Lumen^	3,037,000	-253,000
Frontier	2,839,000	40,000
Windstream*	1,175,000	10,300
TDS	510,000	19,700
Consolidated	367,458	724
Total Top Wireline Phone	30,798,458	-181,276
Fixed Wireless Services
T-Mobile	2,646,000	2,000,000
Verizon	1,452,000	1,171,000
Total Top Fixed Wireless	4,098,000	3,171,000
Total Top Broadband	110,545,539	3,506,827
source: Leichtman Research Group

The point is that when tracking market developments, the big broad trends are discernible from understanding the actions, strategies and results of a mere handful of firms. And while the full range of “big company” strategies, opportunities and actions can vary substantially from those of perhaps hundreds to thousands of small firms, the trends that move the needle financially typically can be gleaned from following just a relative handful of firms. 

In other words, the business “laws of motion” are dictated by a relative handful of actors, even in markets with thousands of contestants. 

That might seem unimportant. For market analysts, it is a foundational assumption.