1. Nielsen Under Attack

The big networks have not been happy with Nielsen for a while now, both in general and specifically because they claim Nielsen undercounted viewers during the past year. In addition to the broader charge of “how can you figure out what people are watching based on so few households” there are more specific charges like failing to check on households having tech issues during the pandemic and underrepresentation of Black, Spanish-speaking and younger viewers in the panels.

Using the VAB as their sword, the networks have been knocking Nielsen for the past few months, which culminated in the VAB asking the MRC (Media Ratings Council) to suspend Nielsen’s accreditation until they get their act together and fix some of these issues.

Why It Matters

It’s not like anyone ever thought Nielsen ratings were all that accurate to begin with. They arose at the time that TV was becoming a mass market medium and the system of panels was fairly advanced for its time.

They evolved slightly--electronic People Meters replaced handwritten diaries--but mostly there was no reason for them to evolve as they had no real competition and both agencies and networks were happy with the status quo: viewership was massive and everyone was making money.

Streaming was/is of course an issue--Nielsen never was able to figure out a way to replicate its linear success on streaming, and measurement from players like Comscore, iSpot, TVSquared and Videoamp seemed much more in line with streaming’s superior data collection capabilities.

In terms of the current battles, it’s complicated.

Linear viewing is down and ad agencies are looking at this as a somewhat cynical play by the networks to get more money for their linear ads and disguise the drop in linear viewership as somehow being Nielsen’s fault. Or as one executive noted “linear viewers are actually Nielsen’s sweet spot,” meaning that conventional wisdom in the industry is that Nielsen’s panelists are older and less affluent, which is also the conventional wisdom about linear viewers.

At the same time, there are still many agency and brand marketing executives who’d love to wake up tomorrow and discover that the internet was indeed just a fad and that they can go back to spending $20 million each quarter on network prime time and not have to worry about things like incremental reach, audience-based buying, mulittouch attribution, programmatic buying and (scariest of all) addressable.

So there’s that.

There’s also the fact that most everyone knows that the VAB has a point, that Nielsen’s ratings do need a shake-up and that the industry needs to rely on set-top box and ACR data along with panels.

That’s right--they still do need Nielsen. Or something like it.

Nielsen’s panels collect what is known as “person-based” ratings, meaning they can tell you who within the household is watching a specific show. This is something set-top box and ACR data cannot do as they both only measure household viewing. Their “person-based” viewing stats are based on probabilistic data, meaning that if there’s a three year old in the house and someone was watching Peppa Pig, odds are high it was the aforementioned three year old. 

So there’s definitely value in that, only other companies like Hyphametrics and TVision are coming in to try and do the person-based thing better and more accurately.

So there’s that too.

Summing up, even if the MRC does suspend Nielsen’s accreditation, chaos will not likely ensue. Shows will still get Nielsen ratings, ads will be bought and sold based on those ratings and Nielsen will likely have to jump through a few hoops to get re-accredited, though the bigger problems around measurement will remain.

What You Need To Do About It

If you’re a brand marketer and your idea of media buying is to push your agency to keep showing you the Nielsen ratings for “your shows” then realize that you are the problem and you need to join us here in the third decade of the twenty-first century. Yes, it is much easier to just buy linear off of Nielsen, but times have changed and you are missing vast chunks of your audience.

If you’re Nielsen, now is not the time to dig your heels in. This is a great PR opportunity in the making: admit some of your mistakes, promise to “try and do better” (it works for Facebook. Every Single Time) and roll out some upgrades. This will take the heat off of you for a few years minimum.

If you’re one of the newer measurement companies--time to strike while the iron is hot and recalcitrant agency and brand executives will be more willing to listen to your pitches.

And if you’re one of the networks, don’t think we don’t know what you’re doing. We do.

2. Netflix’s New Numbers

So Netflix “only” added around 1.5 million viewers last quarter and despite the fact that the number was still ahead of projections you’d think the sky was falling the way a number of non-industry focused publications have started dancing on their grave.

Why It Matters

Pretty much anyone who was going to sign up for Netflix did so during the pandemic--hence the impressive subscriber growth over the past four quarters. So it’s not the least bit surprising that growth slowed down some this past quarter as people ventured out of their houses again and springtime brought warmer weather (and then some) to the northern hemisphere where the vast majority of potential Netflix subscribers live.

Much of last quarter’s growth came from the Asia-Pacific region while Netflix actually shed 400,000 subs in the US and Canada (“UCAN,” in Netflixese) a stat that has the aforementioned grave dancers tapping their legs in double-time.

Key though is that none of this was unexpected. 

Netflix cannot continue its rapid growth curve--there just aren’t that many people who care about television and they seem to have signed up most of the ones who do.

They can, however, continue to make money, which they did--Netflix showed an impressive 19% bump in revenue last quarter, which is the metric that counts. 

What You Need To Do About It

If you’re Netflix, keep on keeping on. Management seems to get where you are in the market and in the overall lifecycle of streaming, seems to understand that now is the time to start extracting more revenue from your existing subscriber base, whether that’s by introducing gaming or some other means. So ignore the haters.

If you’re one of the other Flixes, learn from Netflix and adjust shareholder expectations accordingly. It’s a finite market.

If you’re an advertiser and you’re considering CTV, remember that the number of subscribers is often less important than how engaged they are. And that the market is finite, so if your preferred streaming services don’t exhibit massive growth every quarter, it doesn’t mean that TV is dying, it's just that you’ve gotten to the next season of The Streaming Wars sooner than anyone expected.