Netflix has valid reasons not to release its data, but the industry has the right to find out anyway

With Nielsen about to release Netflix ratings estimates – against Netflix’s wishes – asi’s Research Director Richard Marks gets to the heart of the controversy

Audience measurement is close to our collective heart – for over 25 years asi conferences have focused on the creation and evolution of TV measurement systems, along with the use of the resulting data by broadcasters, agencies, advertisers and – increasingly – new media companies.

So the current controversy over the measurement of Netflix is of great interest, raising as it does fundamental questions about the very role of audience measurement itself, not least what TV ratings are actually needed for.

This week Nielsen announced that it is now able to measure US audiences to Netflix as a whole and individual shows via their TV measurement panel. Immediately Netflix responded saying that the data was wrong. Of course we don’t know whether it is right or wrong for the simple reason that Netflix doesn’t publicly release its audience data. As one headline screamed: “Netflix says Nielsen’s data is inaccurate—so why doesn’t it release the numbers its damn self?”

At the asi Television & Video Conference in Nice on November 8th-10th we will have something of an exclusive as Nielsen’s Brian Fuhrer will be unveiling the new SVoD measurement system – and its first fruits – to a global audience of measurement professionals.

Netflix’s refusal to share its audience data (Amazon is similarly reticent) has really got the wider television industry’s goat: this isn’t how things are supposed to be done! For decades broadcasters and shows have experienced triumph and bloody defeat in the harsh light of public scrutiny. TAM currency systems are by their very nature shared and scrutinised by all.

So is Netflix being a ‘bad egg’? Shouldn’t it just get with the game and release its audience figures?

Well it isn’t actually that simple. Netflix does have valid reasons why it doesn’t release its data.

From a simple practical perspective, Neflix delivers purely via IP and doesn’t use the data for trading, so it can keep the data to itself.  Netflix doesn’t sell advertising; indeed, that is a core part of its USP. It’s that ‘trading currency’ element that has forced the TV industry to be transparent. Netflix and Amazon have no such pressures.

Netflix is in a war with other SVoD suppliers, so guards carefully what it sees as information that could benefit its competitors – which are its hit shows, what is failing, what genres are its weakness.

Meanwhile, Netflix is in negotiations with its content makers and limiting knowledge of the audience figures gives them a strong hand.  In the UK for example, Love Productions was able to take The Great British Bake Off away from BBC to Channel 4 precisely because it knew it was getting 10million viewers – Love Productions had the power, not the BBC: ‘we have a hit, pay us more or we will leave’.

On a personal level – and this may seem heresy as an audience measurement professional – I love the fact that Netflix shows are not getting traditional ‘ratings’. My perception of the success of a show is purely based on an artistic level, as opposed to perceptions of ratings success and failure.

I am now watching the current Star Trek Discovery series completely free of the usual screaming headlines that accompany any new series  – the usual cycle of a strong opening, a dramatic loss of viewers in week two, atrophy through the season and fear of cancellation by February. Instead, I can just enjoy the series as it is and make up my mind whether I like it, free from speculation about its ratings performance. Meanwhile, Netflix (and CBS in the states where Star Trek is also on SVoD) can sit back at the end of the series and appraise how well it has done in a sober fashion, as opposed to panicking about the overnights, increasingly irrelevant but still obsessed over by media journalists still stuck in the 1990s.

If only Netflix had been around when my beloved Firefly was being made. It ended up being one of the most celebrated and loved shows of the Noughties, despite being strangled at birth by Fox before it got to the end of its first season and before its enduring appeal to ‘box set’ fans became apparent.

It is clearly Netflix’s right to not release figures and I get somewhat bemused by people in the industry seeming to imply that this is somehow an affront to all that is good and proper. The only transaction is between the subscribers and Netflix after all. Why is it any of our business?

Well, the problem is this. Netflix has been portrayed as one of the shining successes of the last decade, transforming TV. The real star has been its PR company. Barely an hour passes on twitter or Linkedin without an industry article proclaiming Netflix as the future of TV, citing huge figures for programming spend and global subscriber growth, although rarely mentioning the staggering $20billion in accumulated debt needed to get this far.

However, these articles don’t just celebrate Netflix’s success, they nearly always join the dots to a decline of TV viewing (even though Netflix is TV, but that’s a whole other article). Netflix is portrayed as the sexy new network killer. Even a BBC correspondent was seduced by that argument this week, tweeting ‘Netflix numbers are nuts… Future of TV even clearer’.

However, what is missing from the numbers Netflix does release are the ones that could place them in context – what share of viewing does Netflix have? What constitutes a successful show on Netflix? How does that compare to a network TV show? The suspicion is that the figures are actually a fraction of those achieved by broadcasters, which would place the ‘death of TV’ narrative in a different context entirely.

Broadcasters feel that they are in an unfair ‘fight’ at the moment. Personally I don’t feel that Netflix is their enemy – it is effectively the natural heir to the home video industry, which coexisted harmoniously with TV for decades.  After all, Netflix did start off as a video rental company before transitioning to streaming. Once again usage figures would allow us to test that hypothesis, but in the absence of them, nature abhors a vacuum and that void is filled with supposition and hype, feeding the ‘death of TV’ narrative. So you can’t blame the broadcasters for wanting to fight back.

In that context, Nielsen’s imminent release of its detailed estimates for Netflix usage in the US can’t come soon enough.  Netflix may not like the figures being out there – and is already claiming they will be wrong  – but competitive intelligence is the lifeblood of the TV industry and if the US constitution upholds the right to bear arms, it can certainly uphold the right of US networks to research a competitor.

Put simply, we totally understand Netflix’s desire not to release audience data, but equally we respect the industry’s attempt to find them out anyway!

Originally posted by Richard Marks at asi
19th October 2017