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Nielsen’s New Rating System Will Measure Netflix

Nielsen is set to solve streaming’s greatest mystery.
By  · Published on October 19th, 2017

Nielsen is set to solve streaming’s greatest mystery.

Now that Netflix is a major Hollywood player the company’s refusal to release their viewership numbers has thrown the entertainment industry’s ecosystem out of whack. For the past several years, the best way to determine a Netflix release’s success was to gauge its popularity on social media. Now it looks like the shroud of secrecy surrounding Netflix’s viewership numbers may be coming to an end.

Today Nielsen announced their new service that tracks Subscription Video On Demand (SVOD) Content Ratings. So far eight major television networks and production studios have signed on including A&E Networks, Disney-ABC, Lionsgate, NBCUniversal, Warner Brothers. Nielsen’s new SVOD metrics will record ratings, reach, frequency, and segmentation reporting. The result will be a streaming service tracking system that serves the same function as standard TV ratings services. As of right now, Nielsen’s new service is only for Netflix, however, they intend to add Amazon Prime and Hulu in 2018.

Nielsen is selling transparency and their new system doesn’t work in Netflix’s favor. The major takeaway here is that Nielsen won’t just be offering viewership numbers, they’ll also be tracking specific demographics like age and reach. If Nielsen’s new system proves successful, Netflix’s competitors will be better positioned in head-to-head bidding wars. In an official press release, Megan Clarken, Nielsen’s President, Watch, issued the following statement:

The significant growth of SVOD services in entertainment markets across the world has created demand from rights owners to understand the size and composition of audiences relative to other programs and platforms. The syndication of SVOD measurement as part of Nielsen’s Total Audience offerings represents a big step forward in terms of moving closer to transparency within the SVOD marketplace.

Right now, anyone brokering a deal with Netflix is at a disadvantage. When pitching a new show to Netflix, a producer can’t negotiate fair market value when there is no viewership data for a successful show like Fuller House or canceled shows like Girlboss. If Joe Swanberg wanted to produce a sequel to his Netflix movie, Win It All, Netflix is in a position to lowball him regardless of how well Win It All did.

Netflix never had an unlimited bank account, it only appeared that way. The leverage from their viewership stranglehold placed them in a position where they could negotiate one-sided deals. Essentially, Netflix could take the money they saved negotiating bargains and invest it in more expensive productions. If Nielsen’s new system works as promised, creators would know their market value and Netflix will have to play hardball if they want to walk out of meetings with favorable deals.

One area where the company is transparent is their financial earnings. Earlier this week, Netflix announced their third-quarter numbers and according to Reuters, the company’s 5.3 million additional subscribers in the third-quarter included 4.45 million in international markets and 850,000 in the United States. Netflix also announced it would boost its content budget to between $7 billion and $8 billion in 2018. Between their growing subscriber base and recently announcing another price hike, Netflix can afford to keep the money flowing.

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