After Calling Cord Cutting 'Purely Fiction' For Years, Nielsen Decides Just Maybe It Should Start Tracking Amazon, Netflix Viewing

from the selective-hearing dept

Wed, Nov 26th 2014 6:14am — Karl Bode

For years, we've discussed that while cord cutting is a very real (though slow growing) phenomenon, the broadcast and cable industry has done its best to pretend that it doesn't exist. For years, the industry blamed the slowly defecting users on the recession or the sluggish housing market, and when the data failed to support that claim, they began going out of their way to argue that these users were middle-aged losers living in mom's basement and therefore irrelevant. In fact, data shows that cord cutters are usually young, gainfully employed, and highly educated users who make plenty of money.

This silly denial included the TV ratings measurement firm Nielsen, which for several years insisted that cord cutting was "purely fiction." When it became clear that cord cutting was very real, Nielsen didn't admit error. It simply stopped calling it cord cutting and started calling it "zero TV households."

Except here's the rub: all that time that Nielsen was downplaying cord cutting, it wasn't bothering to actually measure it. It was only late last year that Nielsen began to at least try tracking television viewers on PC, tablets and phones (something still not fully implemented), and the firm only just announced last week that it would soon begin tracking Netflix viewing (did I mention that it's 2014?). Shockingly, guess what the preliminary Nielsen data leaked to the Journal indicates?

"The Nielsen documents also contain some of the strongest data to date suggesting that time spent on these streaming services is meaningfully eating into traditional television viewing. Television viewing is down 7% for the month ended Oct. 27 from a year earlier among adults 18 to 49, a demographic that advertisers pay a premium to reach. Meanwhile, subscribership to streaming video services has jumped to 40% of households in September, up from 34% in January, Nielsen found. That is a rate of growth that advertising agency executives who saw the Nielsen document said they found shocking. Netflix accounts for the vast majority of the viewership."

That's on top of the small but meaningful net loss of 150,000 pay TV customers last quarter; including the first ever third-quarter net loss for companies like DirecTV. Nielsen, like broadcast executives, has a vested interest in propping up the legacy cash cow and burying its head squarely in the sand, hoping the obvious cord cutting phenomenon is akin to yeti and unicorns. We've seen an increasing number of top telecom and cable industry analysts who spent years insisting cord cutting wasn't real, only to sheepishly and quietly change their tune over the last year. Now that Nielsen's actually bothering to measure the data, it should be only a matter of time before it too admits it was wrong, right?

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Filed Under: analytics, cord cutting, measurement, metrics, online streaming, online video
Companies: amazon, netflix, nielsen

28 Comments

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Reader Comments

The First Word

“

I'm just going to leave this here

"Except here's the rub: all that time that Nielsen was downplaying cord cutting, it wasn't bothering to actually measure it."

This is a perfect fit for one of my favorite quotes -- one that has wide and frequent applicability, unfortunately:

"The first step is to measure whatever can be easily measured. That is okay as far as it goes. The second step is to disregard that which can't be measured or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be measured easily really isn't very important. This is
blindness. The fourth step is to say that what can't be easily measured doesn't exist. This is suicide." --- social scientist Daniel Yankelovich describes the "McNamara fallacy". Quoted by Jay Harris, former publisher of the San Jose Mercury News, in a speech explaining why he resigned his post. [http://www.poynter.org/centerpiece/harris.htm]

—Rich Kulawiec

”

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Groaker (profile), 26 Nov 2014 @ 6:28am

Cables prices are up, while quality is down
The price increases in Cable don't really mean much to me, other than being as irritant. The value is another story. I gave up watch TV years ago, though my wife continued to watch.

But ghost stories on the history and science channels? Unending repetition? No ala carte slections? Prices that go up in significant multiplications of the inflation rate. More and more commericials?

If alternatives had not been available by now, I would have put the TV in storage, or used it as a monitor. The Cable networks have nothing to off. Now I get a couple of premium channels with Roku that come to about $10/mo and VOIP for $12. Unfortunately the net is still from the cable company, and I get 3-18Mbs for $65. Still a lot better than the $190 I was paying. More importantly, stuff I can actually watch,
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BentFranklin (profile), 26 Nov 2014 @ 6:32am

I never understood their reluctance to measure TV and radio streaming. It should be the easiest thing to measure and be far more accurate than survey results.
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Paul Renault (profile), 26 Nov 2014 @ 6:37am

"zero TV households"?
Jeepers, so do I get to be my own sub-category? "Big-screen TV but no cable households"?

/Nope, not even at $0.01 a month introductory/try-out price for cable. I don't want to encourage or support the dreck that's on cable - 'reality' TV, the same friggin' episode of BBT twelve times a day on twelve different channels, and the Golf Channel(wtf?).
//Do have Netflix, though. And TWIT. And an antenna.
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Rich Kulawiec, 26 Nov 2014 @ 6:45am

I'm just going to leave this here
"Except here's the rub: all that time that Nielsen was downplaying cord cutting, it wasn't bothering to actually measure it."

This is a perfect fit for one of my favorite quotes -- one that has wide and frequent applicability, unfortunately:

"The first step is to measure whatever can be easily measured. That is okay as far as it goes. The second step is to disregard that which can't be measured or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be measured easily really isn't very important. This is
blindness. The fourth step is to say that what can't be easily measured doesn't exist. This is suicide." --- social scientist Daniel Yankelovich describes the "McNamara fallacy". Quoted by Jay Harris, former publisher of the San Jose Mercury News, in a speech explaining why he resigned his post. [http://www.poynter.org/centerpiece/harris.htm]
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PaulT (profile), 26 Nov 2014 @ 6:46am

"That is a rate of growth that advertising agency executives who saw the Nielsen document said they found shocking."

So, something that's blindingly obvious to most of their target demographic and has clearly been on the cards for years is "shocking" to them? They deserve their losses.

On the other hand, they've probably just been lied to by the idiots in charge of the networks. The real issues facing the industry have been ignored so long as they can hold on to dated business methods and blame any losses on "piracy" rather than fixing themselves.
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PaulT (profile), 26 Nov 2014 @ 6:47am

Re:
Maybe that's the problem. Accurate recording might expose some fundamental flaws in the way Nielsen has been recording ratings for the last few decades and thus lead to lawsuits for lost income, etc.
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David (profile), 26 Nov 2014 @ 7:11am

The problem is...
Nielsen reports on trends by comparing their current data to their own data from previous years. Their trending data is going to be off, because they are already far behind the curve.
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Karl Bode (profile), 26 Nov 2014 @ 7:42am

Re: Re:
There does appear to be a fear of upsetting the industry that pays them by showing them data they don't want to see. Even when Nielsen can be bothered to collect some of this data, they're quick to bury it on demand when it suits the cable and broadcast industry.
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Anonymous Coward, 26 Nov 2014 @ 7:43am

I have a handful of currently running shows that I like to watch but they're only across about 5 channels total. Half of them I catch on Hulu anyway.
Some of those channels are free basic channels.
So for about the price of 200 channels, I can watch the 1 or 2 left that I can't get online or over the air.
I don't channel surf, I don't watch idly... I set my DVR to record my shows, watch, delete, do something else. If I lost cable TV tomorrow, I wouldn't miss it.

I imagine similar scenarios for other people.
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Anonymous Coward, 26 Nov 2014 @ 7:47am

Re:
One reason they may be reluctant to measure streaming is that on one level, they aren't needed to do so. The stream provider can easily perfrom the raw measurement themselves. What they can't measure is how many view each stream and what the viewer demographics, but this can be estimated (perhaps cheaper) with surveys, so the question becomes "In an age of streaming video, is Nielson needed at all?"
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DannyB (profile), 26 Nov 2014 @ 8:08am

Slow Growing Phenomenon
It seems every slow growing phenomenon results in the entrenched dinosaurs burying their heads in the tarpits. Let's see:

Switching from the reliable horse and buggy to noisy, smelly, unreliable automobiles that can break your arm when cranking them. Check.

Switching from newspaper and books to radio. Check.

Switching from radio to television. Check.

Switching from snail mail to e-mail. Check.

Switching from land line phones to cell phones. Check.

Switching from printed books to e-books. Check.

Switching from brick and mortar stores to online stores. Check.

Switching from Microsoft Windows to mobile OSes like Android or Chromebooks, for uses where it makes sense. Check.

Switching from broadcast and cable tv to internet streaming . . . um, this is not happening. It will never happen. You are crazy . . . um, are you some kind of a radical criminal pirate terrorist or something?
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DB (profile), 26 Nov 2014 @ 8:22am

Nielsen makes it's money by estimating viewership of broadcast media.

This was valuable and important because it's otherwise very difficult to know how many people are watching a broadcast.

But with Netflix and similar services, the count of viewing devices is known. Even the type of device is known.

Nielsen's business model is under far more threat from this transition than the broadcasters. Of course it's in their best interest to pretend it doesn't exist when reporting to those that pay them.
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MikeC (profile), 26 Nov 2014 @ 8:22am

Real Life Cord Cutter (well almost)
Cut cableTV two years ago. Went with comcast business account 50/10. Use dedicated entertainment PC hooked to 55" in LED, blu-ray, 7.1 sound...

Before we cut cable, tv was always on some cable garbage, pawn stars, parking wars, storage wars, some old movie for 20th time. Those basic fill garbage cable junk shows! -- cost of 190-200$ a month w/cable,net,phone from comcast Xfinity.

Cut cable, HD Antenna for local channels. No Netflix though(delays!), lots of use of network websites to view.

Guess What - haven't watched Pawn Stars in 2 years, no one will intentionally watch those garbage cable fillers.. amazing what they don't miss!! Bill is down to 100$ a month for the cable business account. I did keep phone due to the nature of my business. W/O phone would be under 80$ a month vs 190-200$ and I get better viewing experience, on my own time, less fill. I do have HuluPlus! but am thinking of cutting it. Even if it cost the same I wouldn't go back, the time shifting alone is worth it.
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James, 26 Nov 2014 @ 8:26am

Cable prices are not up
We have 3 choices in my area.

All of them have been about the same price for at least the last 5 years.

100+ for Internet.
10 to 40 for cable TV
5 to 20 for phone service
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BentFranklin (profile), 26 Nov 2014 @ 8:28am

Re: I'm just going to leave this here
Your link is 404
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jupiterkansas (profile), 26 Nov 2014 @ 8:41am

Re: Re:
If the streaming provider isn't making the data publicly available or even available to the content providers, then yeah, there's a big role for Nielsen and they should have started doing this the moment Netflix.

What I don't get is why Nielsen doesn't record ALL video content in its surveys - Netflix, Youtube, library rentals, phone, etc. What good does it do them to ignore any of it, and how hard could it be to accommodate it? And why would the networks want inaccurate information?
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jupiterkansas (profile), 26 Nov 2014 @ 8:42am

Re:
Then perhaps you should lose the cable and save some money?
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JEDIDIAH, 26 Nov 2014 @ 8:43am

Re: Cables prices are up, while quality is down
Frankly, without the rise of the DVR in the late 90s I would have given up on TV back then. It was already bothersome and seemed like a cesspit without the benefit of computer aided search techniques.
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Anonymous Coward, 26 Nov 2014 @ 9:23am

Rube Goldberg way of doing things
Why do things the easy way? Instead of simply buying the stats from netflix, Nielsen " will analyze the audio components of the program to identify which shows are being streamed.".
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Anonymous Coward, 26 Nov 2014 @ 10:41am

Re: Cable prices are not up
Congratulations on your mystical fantasy wonderland. Everywhere else, cable prices rise almost biennially.
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PW97, 26 Nov 2014 @ 10:46am

This is about Nielson trying to stay relevant.
If you read the industry trades, advertisers are fleeing from broadcast and aggressively pushing into the digital domain and have been for years. They see real numbers not just sampling and averages from the likes of Nielson.

That's the thing about digital, it already has viewership numbers in high detail, real numbers accounting for every view and location. The digital medium enables targeted slipstream advertising - more money returned for the advertising dollar spent and the very targeted consumers.

Nielson is trying to stay relevant, wants to be the clearing house for all viewing statistics. The thing is they like broadcast operate using outdated business models related to digital, they still don't get it.

Netflix, Prime, iTunes none of these need Neilson to sell advertising space, advertising is already built into their platforms, which they tightly control and manage and even limit because it's not how they make money, it's value add and subscribership or direct sales of the program watched (DVD, BluRay, Digital Locker|Movie cloud) is their bottom line.

What value does Neilson offer to companies like Netflix or iTunes or Amazon which already have effective digital business models and advertising that fits into those models to sell goods?

This isn't about Netflix or Amazon or iTunes or Googles premium play for Youtube, this - from my perspective - is about a dinosaur looking to find relevance in the new world and trying to bring the present into the past.
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Deck, 26 Nov 2014 @ 11:05am

Just finished a week as a 'Nielsen home'
I did it previously about 10 years ago, where Nielsen mailed a booklet for each TV to write down who watched what and when. So when they contacted me again a month or so ago, I naturally assumed that this time they would send a link to a website where the same information would be recorded online with the assistance of local TV schedules and maybe even station affiliate lookups.

Nope. They sent pretty much the exact same physical booklets, with a few extra columns to document the viewing of time-shifted programs via DVR. They did send a link, but it was to a site dedicated to explaining how to fill out the booklets.

So Nielsen not only has their heads in the sand concerning the implications and pace of today's technology, but are also actively ignoring it when it could assist in doing their job more accurately and efficiently. Yikes.
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R.H. (profile), 26 Nov 2014 @ 1:58pm

Re: "zero TV households"?
If you use an OTA antenna and access any of the networks that way, your category is already covered by Nielsen. In fact, I was in the same situation the one time my family's house was selected as a Nielsen house back when I still lived with my mother. It was quite an informative experience.
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Anonymous Coward, 26 Nov 2014 @ 2:03pm

Re: Re: Re:
Remember that Nielsen's customers are the cable and broadcast industry -- and THEY use the stats to set pricing for ads, which is the primary purpose for the ratings.

If Nielsen starts proving that people aren't going to cable and broadcast anymore, but are instead going to streaming... where is the ad revenue going to go?

As long as the data stays buried, ad revenue keeps flowing through the traditional channels.

And as for streaming -- there's no demand for Nielsen's services there, as the streaming companies already know who is streaming what and when. And THEY set the ad pricing for their services.

The eventual outcome of this entire situation is that traditional broadcast will no longer be able to fund all the shows people want to watch, and streaming services will have to start funding it -- and the old services want to buy some time to position themselves to BE the streaming services before that happens (see the current attack on NetFlix in Canada for the first shot across the bow).
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PaulT (profile), 27 Nov 2014 @ 12:37am

Re:
In other words, the typical business model issue.

Nielsen could still provide value by collating the information from other sources, providing valuable data services, analysis and ways to provide intermediary services between networks and their advertisers. They still have a place, and a potentially valuable one. It's just not strictly the way they've been doing business so far.

In other words - when you get down to the basics, it's yet another example of dinosaurs not wanting to change their ways while they still have the cash cow in their reach.

At least Nielsen seem to be starting to realise there's no choice other than to change, rather than fight tooth and nail in the courts to keep their old business model.
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John Fenderson (profile), 1 Dec 2014 @ 9:36am

Re: Re:
"In an age of streaming video, is Nielson needed at all?"

There is a need for an independent auditing agency, though, to make sure that the numbers being reported by the streaming companies are actually accurate. Nielson could fill this role.
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FloxenTurtle (profile), 16 Dec 2017 @ 1:34pm

Re: Re: I'm just going to leave this here
Archived as of October 2002:

http://web.archive.org/web/20021021013139/http://poynter.org:80/centerpiece/harris.htm
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FloxenTurtle (profile), 16 Dec 2017 @ 1:40pm

Re: Re: Re: I'm just going to leave this here
Ah, I see, the WSJ also 404's.. It's URL appears to have changed to:

https://www.wsj.com/articles/nielsen-to-measure-netflix-viewing-1416357093
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