Netflix Mocks NBC's Obsession With TV Ratings Systems Built For A Bygone Era

from the the-wailing-of-the-dinosaurs dept

Thu, Jan 21st 2016 1:48pm — Karl Bode

Last week, NBC executive Alan Wurtzel boldly claimed that Netflix and YouTube weren't threats to traditional cable. His only evidence? Data purchased from a company named Symphony that guesstimates Netflix's closely guarded viewership numbers. That data actually showed Netflix's viewership numbers for its original series are impressive, but found that viewership wanes a little once users get done binge watching. That's it. The data didn't really support Wurtzel's claim that Netflix doesn't pose a threat to traditional cable, NBC was just boasting that it had figured out Netflix's viewership tallies.

Symphony was born out of the well-documented failures by Nielsen to track consumer viewing on new platforms, and not only tracks every viewing habit of some 15,000 Netflix customers, but also uses GPS data to track where these customers are viewing the content. It's a welcome improvement for an industry that spent the last decade paying for data that only told it what it wanted to hear: namely that cord cutting and Internet video weren't a serious threat.

And while trying to understand your competitors makes sense, it's hysterical how Netflix's hidden viewership numbers seem to drive traditional broadcasters absolutely crazy. You'll recall that CBS threw a similar hissy fit last year, clearly upset that Netflix doesn't have to adhere to traditional ratings metrics because it's not an ad-supported legacy service.

Netflix chief content officer Ted Sarandos also spoke at the same Television Critics Association meeting, and first highlighted how it's telling that NBC took its allotted time at the meeting to obsess over Netflix:

"Given what is really remarkably inaccurate data, I hope they didn't spend any money on it," he said of the numbers. "There's a couple mysteries at play for me. Why would NBC use their lunch slot to talk about our ratings? Maybe because it's more fun than talking about NBC ratings. … The methodology doesn't reflect any sense of reality we keep track of."

But then Sarandos went on to make what's probably the biggest point (and one CBS and NBC clearly don't understand): the existing ratings measurement system doesn't matter when you're not reliant on traditional advertising.

"I can't even tell you how many 18-49 users we have … we don't track them," he said. "Those sample sets don't give you a lot of information when people are watching thousands of shows [on Netflix] around the world. Somewhere in the world, every second of every day, someone is pressing start on a Netflix original. … There is not an apples to apples comparison to Netflix watching and any Nielsen rating."

Sarandos noted that the specific numbers — Wurtzel had 4.8 million adults 18-49 watching Jessica Jones, followed by Master of None (3.9 million adults 18-49) and Narcos (3.2 million adults 18-49) — wouldn't even be relevant to his business if they were true. "The ratings themselves have no specific impact on the business," he added. "If we were spending a lot of money on shows people weren't watching, they will quit. People are finding value in how we're spending our content dollars … if they're watching today, tomorrow or seven days from now."

As for NBC's claim that binge watchers always return to watching TV in the "way god intended," Netflix noted in its quarterly letter to shareholders (pdf) that "our investors are not as sure of God's intentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years." Obviously the histrionics by broadcast executives surrounding Netflix obfuscating its viewership numbers originate in jealousy; jealously that Netflix gets to operate under a new paradigm where traditional ratings are less important, while legacy sector executives have to stare at charts like this one:

The collapse of broadcast TV ratings. How close to zero before we stop talking about "broadcast", "TV" & "ratings"? pic.twitter.com/4IWnkNAe1J
— Chris Anderson (@chr1sa) January 18, 2016

And while it's great that the traditional cable and broadcast industry is finally cooking up viewer measurement systems that challenge its long-held delusions about cable's infallibility, the petty sniping at Netflix really isn't all that flattering and isn't going to help them compete anytime soon.

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Filed Under: streaming, tv ratings
Companies: nbc, netflix, symphony

28 Comments

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Anonymous Coward, 21 Jan 2016 @ 1:53pm

Netflix brings up a good point. It doesn't matter what people are watching and when or where they are watching. What matters is if they are paying their monthly subscription or not.
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PRMan (profile), 21 Jan 2016 @ 2:19pm

What God intends
Since Netflix has hundreds of Christian movies and shows and NBC has none, I'm going to guess that God favors Netflix.

Sorry, NBC, you lose again...
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Anonymous Coward, 21 Jan 2016 @ 2:23pm

I think this argument started when Netflix claimed that if one of their shows (I forget which one) were on cable, it would be the highest rated cable TV show. If they are going to make claims like that, they shouldn't act shocked when somebody asks them just what their viewership numbers are.

On the flipside, I think the production companies would really like to know what the viewership numbers are on Netflix. Netflix doesn't pay per stream, so the only way to compare a deal from Netflix with a deal from a cable or broadcast channel would be to calculate a $/viewer number.
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sehlat (profile), 21 Jan 2016 @ 2:26pm

What matters to whom matters.
Companies listen to whoever is paying them for their products and services.

Advertising-supported entertainment companies listen to the advertisers and the people who actually watch (or put up with) the shows don't matter.

Customer-supported companies, on the other hand, listen to their customers and don't give a hang about intrusive outsiders like advertisers.

One benefit of the new arrangement is an hour-long show can BE an hour-long show. In the 1960s, an Outer Limits episode was 50 minutes long. (Guess where the other 10 minutes went.) Buffy episodes (1997-2003), OTOH, were 40 minutes long. (Same guess.)

People will pay gladly NOT to have one-third of an hour of their time being a dead waste.

The enormous benefits to the viewers are quite apparent to both Netflix and the viewers. Netflix KNOWS that shows are being watched and that "ratings" per se don't mean a damn thing. So good shows have much better odds of surviving. And they're always available on demand for whenever the viewer wants to watch them. I call that a very good deal.
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JBDragon (profile), 21 Jan 2016 @ 2:27pm

Re:
That's right! Ignoring people cutting the cord like myself. The younger generation,, the young Teens NOW are pretty much only seems to be watching YouTube!!! I don't get it, but it's YouTube for everything. My brothers young kids pretty much only watch Netflix for kids. They didn't know what commercials were for the longest time. Do these people think they're going to sign up for Cable as a adult? Or watch broadcast tv?

Things aren't going to get better for them. They'll get far worse and people are dying off.

What was the Original reason for Cable TV? It wasn't 200 channels of crap. It was because Analog TV in many places SUCKED and there were only a few channels from the antenna. I grew up with just a Antenna. We had a box so we could turn the antenna to get some channels and turn it some another way to get others. It sucked. While my friends next store had Cable TV. They had HBO back then, which was the only Premium channel. MTV still played Music Video's, there wasn't a ton of channels, but you got them clearly.

Now you have 200 channels of crap, maybe only watch 20 at most. You need a Box as it's all encrypted, which costs you more money. What are you really getting for all that money you're spending these day?

I cut the cord about 4 years ago. When I got my house I mounted a large antenna. I get ABC, CBS, NBC, FOX, CW, PBS all in HD and 5.1 surround plus other channels like MeTV and Antenna TV, etc. All 100% Legally FREE.

But even that seems to be going away because of the generation of watching Youtube!!! Netflix will survive youtube, but the others??? There's just so much content these days trying to get your attention. Why would anyone want a $200+ Comcast bill every month?
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swagv (profile), 21 Jan 2016 @ 2:28pm

Two evils
Too bad Netflix and NBC are equally douchy
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connermac725 (profile), 21 Jan 2016 @ 3:30pm

NBC
Or what I like to call it the "Now Being Cancelled " channel there have been so many good show axed by them I do not even bother to dvr them anymore like jlo's new show I bet its gone before they get their first paychecks from NBC
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Anonymous Coward, 21 Jan 2016 @ 3:39pm

I sort of get a chuckle when I hear this business about the PPV dying with the boomers. Here's a clue. I'm a boomer and cut the cord over a decade ago. Why? Poor programming, too many commercials on my dime, too many reruns, too few shows I actually wanted to watch. To me it had reached the point I wasn't getting my money's worth then.

By everything I read now-a-days it continued downhill long after that. I think of all the money I haven't wasted on PPV over the years and smile.
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Anonymous Coward, 21 Jan 2016 @ 3:45pm

Re: Re:
The younger generation,, the young Teens NOW are pretty much only seems to be watching YouTube!!! I don't get it, but it's YouTube for everything.

Youtube has what cable promised, channels for all interests, and it has an advantage over cable, communities form about various topics and areas of interest, exchanging ideas, solutions to problems, and better ways of doing things. The big advantage of Youtube, is that it is always possible to find something that suites your interests and moods, and indeed the problem becomes not one of finding interesting channels, but deciding which ones to drop as there is an embarrassment of riches there.
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John85851 (profile), 21 Jan 2016 @ 4:26pm

Scheduling
The other reason the traditional networks should be scared of Netflix is the scheduling aspect:
On Netflix, I can watch all the episodes of a season over a weekend if I want.

On traditional networks, we (still) have to wait until September for new episodes. Then we get to see maybe 8 episodes, then a "mid season finale", then another 4 or 5 episodes in March, then the rest of the episodes in May and June.

Maybe after almost 60 years of watching TV like this, people want to watch episodes back-to-back.
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Lawrence D’Oliveiro, 21 Jan 2016 @ 5:23pm

Why Don’t They Rate Ads?
I always wondered why ratings were measured on the programs rather than the ads. If it’s the ads that advertisers worry about, why not measure viewership figures during those ads?

Of course, the results may not be what they want to see...
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yankinwaoz (profile), 21 Jan 2016 @ 5:39pm

Not necessarily...
It could be that when Netflix license content, they are required to report back to the content holder the number of viewers on the content. The license could be structured that the content holder gets paid different different amounts when the views crosses predefined thresholds.

This would incentivize content creators to produce shows that people want to watch.

It would also let a content owner figure out what the content is worth. When the license expires, they could use that information to decide what to price the next license agreement at.

What is different here from the networks is that Netflix needs stats for content owners, not advertisers. The content owners don't care about the demographics. Or at least they don't have to have that info like an advertiser would.
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That One Guy (profile), 21 Jan 2016 @ 8:41pm

That's going to sting a bit
"There's a couple mysteries at play for me. Why would NBC use their lunch slot to talk about our ratings? Maybe because it's more fun than talking about NBC ratings. … The methodology doesn't reflect any sense of reality we keep track of."

I hope he handed out complementary burn ointment after a line like that.
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Victor David, 21 Jan 2016 @ 9:21pm

Cutting it
I cut the cord before the expression existed. Back in 1977 I believe it was, I tossed my TV and havn't owned one since. Like someone said above, too much crap, even then. Now I'll stream or otherwise use the intertubes to watch what I want when I want. As far as I'm concerned, cable and broadcast can pound sand.
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Aidian Holder, 21 Jan 2016 @ 10:15pm

Ratings and 'legacy'
1) Not having ratings gives Netflix a big advantage over producers. The value of your program to Netflix is largely about how many subscribers watch it. Netflix knows that number, but a program producer can't negotiate based on those numbers.

2) NBC's ratings suck. All the broadcast networks ratings suck. TV ratings as a whole are about a third of what they were a generation ago. Networks are happy with a 2.0 in demo now.

3) Using the term legacy always strikes me as bs framing against whatever is being branded as 'legacy.' Someday some jerk with an MBA is going to refer to me as a legacy cost and I'm going to kill him.
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PaulT (profile), 22 Jan 2016 @ 12:22am

Re: Not necessarily...
"It could be that when Netflix license content, they are required to report back to the content holder the number of viewers on the content"

Number of viewers, yes, but they won't know the demographics of the viewers. That's the major difference, I think.
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Violynne (profile), 22 Jan 2016 @ 3:04am

That chart embedded in Anderson's tweet highlights the biggest factor every network executive misses.

Look at the chart closely, and you'll see one thing in common: the more options to entertainment, the bigger impact it has to the "Big 3".

We can see where the Big 3 originated, then started to change its own lineup (affecting the other station viewership).

This continues until 1980, or a damn coincidental timing of events that this is about the time cable started making a bigger impact and carrying more stations.

1995 shows another dip, and huh... wasn't this about the time this fad called the "world wide web" started taking off? Seems like it.

Netflix... Netflix yeah, been around a long time, but started its streaming business around 2010.

Damn. That chart is spot on accurate in showing how everyone changes their viewing habits when something new comes about.

I always chuckled at that "18-49" demographic bullshit. Hollywood never understood this demographic other than to label them "captive audience".

To this day, Hollywood only knows how to do one thing: insult its audience by using the same model of show creation established in the late 50s.

Now with full bathroom visuals and non-separated beds.
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Anonymous Coward, 22 Jan 2016 @ 3:11am

Re: Re:
I cut the cord about 4 years ago. When I got my house I mounted a large antenna. I get ABC, CBS, NBC, FOX, CW, PBS all in HD and 5.1 surround plus other channels like MeTV and Antenna TV, etc. All 100% Legally FREE.

Yep. I have two small indoor antennas, one amplified and one non amplified. I get all of those channels (CBS is hit and miss where I live with an indoor antenna, but I get it most of the time). You know how often I flip over to broadcast TV? About once a month. If I watch TV, I'm actually watching Netflix, Hulu, or Amazon Prime. Netflix and Hulu together are around $20/month and Amazon Prime comes with my subscription for fast shipping so I have that no matter what (plus I use the hell out of Prime Now and get my money's worth). So I'm paying $20/month, an internet subscription that I need for my job anyway, Amazon Prime that I pay for anyway...and that's it. The only show I'd watch that I don't currently is The Big Bang Theory and I'm behind on Doctor Who. I don't care enough to be in front of the television when TBBT airs so I'm not even sure if I'd enjoy it anymore.

Yes, that's juts my experience. Yes, it's anecdotal. I have to imagine there are lots of folks like you and me because it's just so damned easy to do. I have to imagine there are other folks that still have cable because they always have, but when another recession comes along that'll be one of the first things to go.
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Ninja (profile), 22 Jan 2016 @ 3:37am

If you don't have to get ad revenue, ratings have very little importance. Actually, the way Netflix operates now it's only interested in the global numbers because the price people pay is flat and does not depend on the content. But let's suppose they try a new tiered system in the future. The basic plan offers a determined broad selection but for an extra you can buy blazing hot, out of the oven new content from X or from Y or even in a per show basis. What if they start offering movies at the same time they are released on the cinemas for a price per movie (like a cinema ticket more or less)? I think we will see this change. Obviously Netflix won't be dumb like NBC and will probably collect and look at meaningful data but I wouldn't be so fast to disregard detailed info like that.
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Anonymous Coward, 22 Jan 2016 @ 4:12am

Re:
Obviously Netflix won't be dumb like NBC

At least until the board changes and the innovative thinkers are replaced by MBA's who have been taught to concentrate on the money flow while ignoring the customers.
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klaus (profile), 22 Jan 2016 @ 5:53am

Re: Re: Re:
I ditched mine several years ago. My set-top box broke and I couldn't be bothered getting someone in to look at it. Three months had passed by and I had one of those "wait a minute..." moments.

I don't miss it at all. My entertainment is pretty much radio, cinema and internet. Oh, and my 32Tb media collection.
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DannyB (profile), 22 Jan 2016 @ 6:04am

Dear Alan Wurtzel
If Netflix is not really a threat to NBC, then why are you so obsessed with talking about Netflix.

Shouldn't you instead be focused on figuring out why your ratings are sinking down, down, down into the tarpit of obsolescence?

The first dinosaur to recognize denial might be able to get out of the tarpit. But probably not at this point.

But thanks for playing.
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DannyB (profile), 22 Jan 2016 @ 6:07am

Re: NBC
Star Trek.

They had no idea what they had in their hands. Utterly clueless.
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hij (profile), 22 Jan 2016 @ 8:24am

Wall Street Might Not Like That
If I were a stock holder in Netflix I would not be too pleased to hear this dialog. It sounds like an explicit acknowledgement, that Netflix does not have a firm understanding of its customers. On the other hand, as a Netflix subscriber I am actually quite thrilled that Netflix does not have a complete understanding of who I am other than my viewing choices. I certainly wish google had the same outlook on its customers.
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That One Guy (profile), 22 Jan 2016 @ 10:53pm

Re: Wall Street Might Not Like That
That doesn't really match what I took away from the statement. He's not saying that they don't understand their customers, he's pointing out that the petty sniping from NBCS is missing the point.

Netflix doesn't worry about the data that NBCS is bringing up(ratings, customer age ranges) because it doesn't matter to Netflix, what matters is what shows are popular and how many customers they have, and those numbers they do have.
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Eldakka (profile), 24 Jan 2016 @ 6:00pm

Re: Re: Re:
But it still retains 1 disadvantage of cable. Ads. It still has ads.
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That One Guy (profile), 24 Jan 2016 @ 9:10pm

Re: Re: Re: Re:
Indeed it does, but unlike cable, you're not paying and seeing ads, rather the ads are the price for the content.
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Anonymous Coward, 25 Jan 2016 @ 3:17am

Re: Re: Re: Re:
Addblockers solve that little annoyance.
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