Information Gain: The secret to a must-watch event
TrueHoop makes an argument today in an article about the importance of parity in praise of uncertainty in sporting results that I think almost completely misses the mark:
Research suggests that more uncertain outcomes lead to more certain income, or … more pie.
There’s a reason that the TV deals for the NFL and the NCAA basketball tournament both dwarf the NBA’s. In just about every game of the NFL season, and in just about every game of the NCAA tournament, you simply must watch to know what’ll happen. It all matters. You wake up the morning of the game with almost no ability to pick any winners. That’s the kind of thrill-ride that leads to enraptured fans and huge TV income.
Don’t confuse luck with parity
Really, in every game you don’t know what happens in football and college basketball, but it’s a given in the NBA? Pshaw. I’ve tackled the issue of certainty/uncertainty here before on several occasions. Here’s the table from when I compared March Madness to the various pro playoff systems:
The left number here shows the winning percentage of the top two teams in each “league” during the regular season. The right number shows their likelihood of being champion. In the regular season, college basketball and the NFL are the most predictable results around, and there’s nothing magical that changes this come playoff time.
However, the playoffs do see both of these sports take a hit in the certainty of final results of the playoffs relative to the NBA. What causes that? It’s the single elimination silly. The whole justification for having playoff series to begin with is that they make it more likely that the better team will win. (Note that’s ‘justification’ not reason which always had a lot to do with more games yielding more revenue.)
Let me say that a different way: It’s not parity, it’s luck. Yes parity would help matters, but the edge the other sports have is entirely based on choosing a playoff format with more randomness. Is one truly willing to say, that every sports league out there willing to adopt a strategy that minimizes actually merit?
It’s not as grim as all that though. Go look at the ratings of NBA finals over the past 30 years. An obvious trend emerges that has nothing to do with parity or luck: Ratings go up when the biggest stars are playing. I know that seems obvious, but consider that the biggest stars will tend to play on favorites, and thus if we up the luck in a playoff system, that would lower the chance of the biggest stars playing in the finals and lower ratings.
So if uncertainty in results and certainty that stars will be in the finals are both beneficial, but work against each other, what’s the unifying principle here?
Information Gain as hook: Yeah, that’s entropy (reduction), man
The key is Information Gain. Hopefully that term makes some intuitive sense to you. To help out a little bit more, you can think about it as what you learn by watching a particular event. If you’re satisfied with that, you can skip ahead past the rest of this paragraph – just know that this isn’t something that’s my idea, it’s something that has had tons of thought put into it in other contexts. For those wanting to explore more on this, Information Gain is a concept from Information Theory that refers to the reduction in Shannon Entropy as a result of an observation.
Here’s the concept applied to the facts above:
Fact 1: People prefer single elimination contests because they know one team will definitely lose everything as a result of the match. This yields much more powerful information about the team that will end up winning the title than a random Best-of-7 series game does, and thus you gain significantly more information in a single-elimination match up.
Fact 2: People tend to prefer watching games with the biggest stars at least partially because they see those games as more meaningful. Yes there is also a matter of emotional attachment to the stars (a tangential but not contradictory point), but there is also a core truth that if every year a different set of players are battling for the championship it begins to sink in that the fortunate players in any given year aren’t likely to be the standout players in subsequent years. Thus the urgency of the moment is diminished as it becomes clear that the watching this year’s event lead you to gain much information about of future results.
(What’s that you say, the NBA may need this, but college basketball is still doing fine? Don’t fool yourself. College basketball finals nowadays don’t get near the buzz of say, the Magic Johnson-Larry Bird finals back in the day. Doing fine is not the same as achieving ideal performance.)
Last I’ll note that while this thinking applies to sports, and can just as easily apply to a soap opera, or any other piece of sequential entertainment. It’s not just the uncertainty, else coin flipping would be a popular spectator sport.
What people need in order to really get reliably hooked into watching an event, even if they already have general interest, is the feeling that they are missing something important by not watching the event.
The NBA’s Playoff Situation
Let’s go back to the NBA here. With the 7-game series system that they have, combined with the relatively luck-independent realities of the sport (much less luck than baseball, soccer or hockey), this means that watching any particular playoff game is not likely to reduce much entropy. Early in any playoff series, I not only know that both teams have additional chances to win, but that the superior team is likely so confident in their abilities that losing the game doesn’t make them or their fanbase sweat. That’s the bad.
The good part is that you don’t win an NBA championship by luck because of this lack of randomness. People may not watch every game of the playoffs, but they do know that what is happening is quite meaningful, and this certainly helps revenue to some degree.
If the NBA is not satisfied with this, what should they do? Well it’s all well and good to say they should increase parity, but that’s actually not very easy to do in a sport where the value of superstars is as tremendous as it is in basketball. I’d say its looking to play around with luck that could conceivably help them.
Consider that in a Best-of-7 series, the further along you get in the series (presuming the series remains competitive) the greater the perceived Information Gain. That translates into better TV ratings, but how big of a deal is that?
Well, the average rating for the NBA finals last year was a 10.6. By contrast the NCAA finals this year got a 11.7. However, Game 7 of the finals earned an 18.2 share. The difference between being beaten by the NCAA, and beating the NCAA salary, really is just a matter of having more at stake in a particular game.
Of course, there is also the matter to consider that a Best-of-7 series means there will be a lot more games. The goal is not to maximize the revenue on a per game basis, it’s to maximize total profit, so there’s a downside to reducing the number of games.
Still if the NBA truly comes to the conclusion they are getting their collective butt kicked by March Madness, it makes sense to try to move more in that direction. That would mean looking to reduce the number of games in some of the series (I don’t think anyone would cry if we went back to a Best-of-5 first round), and getting more serious about properly seeding the playoff teams both initially and after every round to maximize the chances of having a series go deep.