Wall Street and the media however, are another story, and you can 100% expect to see stories about how some new Netflix series garnered millions, if not billions of these two-minute, self-reported “views”, probably even stories that compare it to a network TV show that’s measured via Nielsen’s average-viewer-per-minute linear rating.
Which is why SVOD, subscription video on demand content, needs a standardized third-party ratings system
This may seem counterintuitive, given that SVOD services like Netflix would seem to only care about the number of subscribers they have, regardless of how many people are actually watching their shows.
1. Netflix and other SVOD providers sell product placement. They don’t announce it, it’s not on some rate card you can download from their website, but there’s a reason you’re seeing an iPhone and not a Samsung Galaxy on your favorite show, a decision which has nothing to do with the director’s vision for the character. And in order to determine the value of those product placements—and to help the buyers figure out whether their money was well spent, the Flixes need to have some sort of standardized third-party rating system for their shows.
2. Viewer stats help attract big name talent. Say you want to convince Quentin Tarantino to do his first TV series with your platform. You can offer him billions of dollars, complete creative freedom and a substantial share of the profits. But chances are, the seven other Flixes are making Q the same offer. So your next step is going to be proving to him that your shows attract larger audiences because you have more dedicated subscribers and/or your marketing is more effective. If you’re Team Tarantino, you’re going to want to see actual proof of that in the form of ratings you can compare to everyone else’s ratings. And since all those hybrid Flixes, the ones with both ad-free and ad-supported plans, are going to be using more traditional TV metrics, of the type that make big brands like Ford and P&G happy, you’re going to be at a distinct disadvantage if you insist on showing Tarantino your self-reported digital style metrics.
3. Syndication rights. The beauty of owning all sorts of original programming is that if it is successful, you can eventually sell it off for syndication rights. This isn’t much of an issue right now, as most streaming series are still new, but in a few years, there will be numerous companies who are willing to pay for the rights to series like BoJack Horseman and The Marvelous Mrs. Maisel.
These potential buyers run the gamut from free ad-supported streaming services (FASTS) to traditional cable networks to networks and platforms in other countries who will dub the shows into the local language. The beauty of syndication is that you don’t give up your own rights to the show and you can keep it in your catalog, all while reaping millions upon millions from your licensee. Even better, the syndicated airings act as ads for your platform, reminding people of all the great shows you’ve had on over the years and why they like you so much.
But in order to successfully negotiate syndication deals, everyone needs to know just how popular the show was, how many people watched it, who they were, where they live and when they watched. We’re guessing that no one is going to be willing to pay millions of dollars for a series based on random self-reported statistics, that they’re going to want measurement stats that are from a third party and that line up with everyone else’s measurement stats so they can compare apples to apples when deciding what to buy. [NB: This is also true for licensing deals, where the programmer sells off rights to a show and its characters to everyone from toy manufacturers to auto manufacturers to restaurant chains.]
4. Investors. The Flixes are all publicly traded companies (with the exception of Netflix, they are all actually divisions of publicly traded companies) and as such, ratings can help investors get a sense of how they are doing and are how they are likely to do.
Subscriber numbers are of course the numbers that matters most, but to get a sense of what those subscriber numbers might look like in the months or years ahead, it’s helpful to have a sense of how their current shows are doing, a standardized number that says “more people are watching Series X on Hulu than Series Y on Amazon and those viewers are older and more affluent and thus more likely to continue to subscribe.”
Similarly, knowing the ratings for a service’s current offerings can help predict future revenue from syndication and licensing, something else investors care about.
5. It’s Easy. Getting third-party measurement data for SVOD isn’t rocket science. There’s Nielsen, there’s ACR data from smart TVs and there’s data from streaming devices like Roku. Since SVOD is digital and (as the name implies) subscription, there’s also data about who those people are, their IP and email addresses and their credit card information. So a whole lot of ways to compile measurement data and to know who the actual viewers are.
So why not?
If you think that the actual data is going to put you in a worse position, then you’re not going to want it surfaced. A combination of buzz and “cool factor” and laziness can work in your favor and if the aforementioned targets aren’t going to demand to see actual independently verified numbers, you probably aren’t going to go out of your way to provide it for them.
This will be much less of a factor a year or so from now, when all of the Flixes are up and running and the market is tired of having to wade through a pile of conflicting stats.
Self-reporting worked for Facebook because they were the only game in town and brands and talent could not afford to ignore them.
But with eight Flixes and many, many FASTS, platforms will no longer have that advantage, and so they are going to have to adapt. That is not likely to happen quickly or easily, but eventually it will happen, whether or not the various players are happy about it.