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Who Measures the Measurers?
The Most Important Story of the Week for 6-June-2022
For some stories, the entertainment trades just don’t do a great job providing the type of information and analysis I need to do my job. Other times, they crush it. I’m glad to say that, for the most important story this week, I think the trades crushed it.
So let’s talk about the “TV Upfronts” and the implications for TV measurements going forward.
I try to limit how many newsletters hit your inbox per week, so in case you missed it, here my articles from last week that didn’t get sent out via Substack:
At my own website, I wrote up a quick “Visual of the Week” titled, “What Does The Data Say About “Turning Red” Skipping Theaters? A Post-"Turning Red" Theatrical Vs. Streaming Check In”, updating my Disney streaming and theatrical film chart with Turning Red. Expect more Visuals of the Week in the future, which won’t be behind a paywall.
Over at The Ankler, I wrote a buzzy little post “Netflix: Coming Sooner to a Theater Near You”predicting that, “In the near future, the major film studios, including the streamers, will release their medium-to-big budget films in theaters.” Check it out.
Finally, there's just under two weeks left before my paywall goes up. Please subscribe!
Most Important Story of the Week - Streaming TV’s Measurement Wars
The month of May featured the return of “The Upfronts”, the annual tradition where networks announce/preview their fall line-ups (and by extension their cancellations) and try to sell their advertising inventory for the next TV season.
On the advertising side, the ongoing story for the last few years has been fairly clear for anyone following TV news: it feels kind of old fashioned. Dated. Passé. Why should advertisers commit their ad spending upfront (and pay top dollar) when broadcast TV isn’t exactly growing? Google and Facebook let buyers spend millions with the click of a few buttons. But you’ve probably already read that take elsewhere.
(The real reason it still exists? Hollywood and Madison Avenue love their parties.)
On the content side, the trades covered the horse race of which studios and networks picked which shows and from whom. Lesley Goldberg and Rick Porter at THR provide some of the best coverage. Here are two examples of good articles to read to understand the long term trends.
There's also an interesting story about how the broadcasters are cancelling fewer shows because the shows have second lives on streaming, except for The CW, which cancelled an abnormally large number, for them, due to their unique corporate structure.
The most interesting story though was the subtext of The Upfronts. See, The Upfronts aren’t the only advertising game in New York anymore. A few years back, the digital players started the “New Fronts” to sell their digital wares. And this year, one company tried out “The FlexFronts”, which, I think, is a term Samba TV came up with. That latter event symbolized the tension under the surface of The Upfonts:
The Measurement Wars
In all these different “Fronts”, the battle is being waged over “measurement”. Without knowing who is watching something, you can’t reliably sell advertising against it. Since advertising is a huge business, who controls the measurements stands to make some money. And that’s the topic for today.
The Measurement Wars Are A Microcosm of the Streaming Wars (With One Big Exception)
The media has a “disruption” bias, which few people acknowledge, if they’re even aware of it. From the entertainment trades to the business press to the investor newsletters, we love when one company disrupts (or even could disrupt) an entire field.
And we often ignore potential criticism of said disruptors.
Netflix disrupted TV, so we ignored the huge flaws in its business model until about a month ago. Uber disrupted taxis, so we ignored that it lost money. Facebook disrupted…life. So we ignored its problems until 2016, when they became too big to ignore. TikTok is disrupting the social giants, so we are currently ignoring some HUGE red flags about its growth.
In a way, the field of digital measurement disruptors—what I call “streaming analytics companies”—are the Netflix to Nielsen’s traditional studios analogue. Traditional studios rose to power in the days of analog distribution; Nielsen rose to power measuring that distribution with analog paper and pens. Netflix used digital distribution to disrupt how TV was sent to homes, and it was backed by exuberant Wall Street tech investors; streaming analytics companies use digital methods to measure viewership, and they too are backed by enthusiastic tech (this time VC) investors.
As such, the coverage seems biased in favor of those upstarts, because again we love disruptors as a field.
The big difference between Netflix and Nielsen is that Nielsen really did have a moat around TV measurement until the last decade. Not a fake moat—like the ones everyone thought Netflix was building—but an actual moat. Their measurement system was the industry-wide standard. Everyone who buys or sells ads, or made shows, needed access to their data. That’s a moat and, yes, they were a monopoly in this small field. As a result, they likely did become stale in their processes, data and research. That’s what happens when you have a moat.
But digital disruptors want to change that.
A Quick Bias Alert: I’m Friendly With Nielsen
It shouldn’t surprise you too much when I let you know I’m friendly with some folks at Nielsen. As a analyst/journalist, I want to be clear about when I could have a conflict of interest.
I use Nielsen data every week in my Streaming Ratings Report. I’ve spotted problems with Nielsen’s data and let them know. Despite these problems—and we’ll get into them—Nielsen’s data is still the single best, publicly available source for streaming ratings. It is regular, consistent, numerical and public. No other streaming analytics company can make that claim. So I use their data and I think it has advantages over the disruptors.
The Situation for Streaming Ratings - Three Distinctions to Know
Before we explain who the digital disruptors are and what they bring to the table, it’s worth clarifying two features of the measurement landscape that get conflated. Or discussed at the same time.
There are two general purposes for measuring viewership. The first purpose is what I cover in the weekly streaming ratings report: what's popular. To know what works and what doesn’t, for its own sake. The studios and independent producers of the world also want to know what is popular and what isn’t. (And in some cases to forecast revenue, such as box office or home entertainment sales.) But knowing what’s popular has its own value.
Contrariwise, advertisers could care less about the popularity of a given show or film, and more about the number of eyeballs watching at a given time. Content is just a delivery mechanism for viewers watching ads. As such, knowing as much as possible about the viewers (demographics and what not) is also very important.
In many cases, purpose one aligns with purpose two, but not always. Which is why different streaming and linear analytics firms could have different processes and outcomes. And the customers—the advertisers and networks—may have different demands.
I now track quite a few analytics companies to help put together my Streaming Ratings Report each week, and I roughly lump them by what is their expertise and whether they're ad-focused or content-focused:
Ad-Focused: iSpot, VideoAmp, Comscore, EDO, Open AP, LG Ads, Samba TV
Content-Focused: Nielsen, ParrotAnalytics, Digitali, Reelgood, TV Time
And many more I likely missed. And many of the above would probably say they can do both types of measurement. I would add, what you measure also depends on who you sell it to, the second key distinction. (And the most glossed over part of the coverage.)
Here are the customers for viewership data:
Customer 1: Advertisers
Customer 2: Networks/platforms
Customer 3: Content creators
Each customer wants different things from their measurement system. For example, networks want “accurate” ratings, but they wouldn’t mind if all the numbers were a little high, would they? The advertisers, on the other hand, value accuracy above all. In fact, if the numbers were a little under, that means they’re actually reaching more people than they’re paying for.
What Will Change? And Who Will Win?
So those are the two biggest distinctions in the measurement landscape, and it’s all getting disrupted by the digital revolution. Now everyone wants to know: will Nielsen die? And who will replace them?
First, I don’t think Nielsen will “die”. In fact, I find the arguments against Nielsen to be a bit disingenuous. And self-serving. The networks’ biggest gripe with Nielsen is they think they are undercounting viewership. And the new streaming analytics companies are happy to fuel that speculation, often with splashy numbers.
But think about that. The networks, which want to make more money, want to use streaming analytics companies who say their viewership is much, much higher. No conflict of interest there!
More importantly, Nielsen has a big built in advantage, which is their network of survey takers who are real people. This allows Nielsen to take digital measurements and tie them to real people. For all the progress we’ve made in digital measurements, there is still a dead zone after the screen. We know that a TV is turned on, but we don’t know who is actually watching said TV. Nielsen has a large sample group who helps them fill in that blank, and that’s an expensive upfront investment. (This is also Nielsen’s biggest defense of themselves.)
But I don’t see Nielsen conquering this landscape as it ruled the measurement landscape in the latter half of the twentieth-century. Many advertisers, ad-buying groups, and networks see a world with multiple measurements. (The word of choice used was “currency”.) This makes sense to me: with the lower barrier to entry and varied forms of digital TV, I could see a few different firms carving out niches. But not too many, since the industry would like to settle on a standard.
In general, I welcome a world with multiple measurement providers. The more unique, diverse measurement sources we have, the better picture we’ll have of the streaming ratings wars. Like I said, I love Nielsen’s measurements, but when it comes to streaming ratings, I’m polygamous and the more the merrier.
If you ask me which of the streaming/digital analytics firms win, who knows? Your guess is as good as mine. Figuring out who really has the best measurements is something the advertisers and networks/studios will have to figure out.
That Said, More Public Data Is Better For Everyone
One of the reasons Nielsen has come under fire is because they put out a lot of public data. Specifically, the top ten list I use each week. And in the past, they’ve had to update that data and admit they had measurement errors.
Their competitors—the streaming analytics companies who are new to the space—don’t release their data publicly. As a result, they usually don’t have big, public updates to share.
Do you see the problem? They’re holding Nielsen to a standard they don’t hold themselves to. Not to mention, who do you trust more, the company that never updates incorrect data to avoid looking like they made a mistake, or someone who tells you when the screw up?
If you want to replace Nielsen—cough cough Samba TV, LG Ads, EDO, iSpot, Digitali cough cough—release a weekly top ten list of your viewership numbers, with customers or impressions or hours viewed. That’s only fair.
Quick Related Notes
A few other quick thoughts on this fascinating topic:
Fraud is a HUGE issue that a lot of the networks, platforms and digital players want to ignore. But since digital is both easier to measure, it’s also easier to game. The advertisers need to fight harder against measuring fraudulent viewership figures.
It gets thrown around a lot that this is “big business” and the total ad market is indeed a multiple hundred billion global market. But Nielsen “only” makes $3.5 billion in revenue per year. So it’s big, but not THAT big.
There is also the “global” vs “local” issue, that I didn’t really get into above. I write from my, admittedly, biased U.S. point of view. If you’re from across the pond and think this view is too narrow, well, you’re probably right.
Some firms measure “interest” as opposed to viewership. I included some above, but for me actual viewership is about ten times as useful as “interest”.
Lastly, I have some lingering concerns about privacy for all the streaming analytics companies. Do customers know how much data they’re giving away to these companies? Is there a “Cambridge Analytica” scandal for entertainment out there lurking?
Almost Most Important Story of the Week - “Dancing With the Stars” Moves to Disney+
Unlike Netflix, the old-school, traditional studio-conglomerates (OTSC? Does that acronym play? I’m being told “No.”) face more immediate, perplexing financial challenges, like how to maximize revenues while building out their streaming services, which all currently lose money.
Before, say, April of 2022, if you read the trades (or spent too much time online), the answer was obvious: put everything on streaming! Leave it there forever! Never look back.
After The Great Netflix Crash of 2022, though, we’ve come to reconsider that assertion. Maybe streaming isn’t such a good business since everyone loses money on it? Maybe making money in the short term makes sense too?
Thus the traditional studios face some difficult choices, epitomized by Disney deciding that Dancing With The Stars(DWTS) would move from its traditional home on ABC to Disney+ this fall. My family—devoted DWTS fans—will be fine, since we’re basically locked into Disney+ for life. But what about the seven million other people? (Cross-Screen Media’s blog had a good look into this with some numbers if you’re curious.)
Normally, this is where I’d take a pretty strong stand one way or the other and…
…I just can’t find it in me on this one.
While DWTS has been solid in the ratings, I actually had the feeling it was on the bubble for the last few years as linear as live viewership decayed. Meaning it was just as likely to get cancelled. So in that since, taking its talents to Disney+ makes sense! And probably overlaps with the same audience. Disney+ did have the cross-over sing-along specials, which could be a good gauge for audience interest in this type of content.
My favorite strategy is to air things on both linear TV and streaming, but Disney probably couldn’t move DWTS to Disney+ exclusively because of Hulu’s output deal with ABC. So as a flyer, sure, let’s see how it does. (In other D+ licensing news, old episodes of Glee also recently arrived on Disney+ so we’ll see how that does in a future Streaming Ratings Report. Subscribe now!)
M&A Updates - Sony Makes Lots of Moves and India
There’s been a lot of focus on Candle Media’s ongoing production roll-up of content companies. (There latest being ATTN and Exile Media.) More quietly, but possibly more significantly is Sony, who has bought a few companies of their own:
A couple of years back, Richard Rushfield reported that Sony corporate was heavily considering divesting their entertainment assets. Post-Spider-Man: Into the Profit-verse and Jumanji, that stance may have softened. With this buying spree, one could also argue they’re finally seeing success and leaning into becoming the ultimate “streaming arms dealer”. (Or they’re getting ready to sell at maximum valuation.)
I’d also key in on that last buy, the Zee Media merger. Sony is trying to trying to create an Indian media conglomerate (with two streamers) to rival Prime Video, Netflix and Disney’s Hotstar. Meanwhile, James Murdoch partnered with Uday Shankar to invest in Viacom18, another Indian streamer.
Notably the Murdochs have experience in India, investing in Hotstar, which they sold to Disney.
Other Contenders for Most Important Story - Two Audio Stories
Facebook (Meta) Exits the Podcast Space
One of my favorite dunks on Big Tech the last couple of years is how fascinatingly uncreative they’ve been. Besides a few notable exceptions—Google with self-driving cars, Amazon’s Alexa—a huge number of Big Tech’s capital expenditures are simply excuses to deploy their cash piles somewhere, since what else are they going to do with it? Witness Facebook mimicking half-a-dozen media or entertainment businesses, and usually failing. FB pulling back from podcasts is simply the latest example.
Spotify Has Some Internal Disruption
Speaking of audio, I never mentioned the two big stories about Spotify. First, one of their top dealmakers departed. And so did the Obamas! And there are rumors that Spotify’s podcasting efforts haven’t delivered the returns they hoped, especially for the amount invested.
In other words, Spotify is the Netflix of steaming audio.
Lots of News with No News - That Trial
There was a big trial you may have heard about featuring two famous actors. I didn’t write about it and won’t. My focus with this newsletter is to write about the strategy of entertainment companies, with a focus on filmed entertainment, and streaming ratings. Others cover big flashy trials with little business implications better, so I let them. I consider this a strength—my focus on business issues—as opposed to a weakness.
Other Things to Listen or Read
With Jurassic World: Dinosaurs Gone Wild hitting theaters soon, here’s a fascinating video on chaos theory. The actual theory, mind you, not what Professor Ian Malcolm was pushing.
Why share this video? Well, it shows how even simple things can be virtually impossible to predict, like the “Three Body Problem”. Do you want to predict the rotation of one planet in a star system? Easy. Two orbiting bodies are easy to track from now until forever. But what if you introduce a third rotating body?
Humans can't predict the future. There's too many variables. So how could Netflix have a magical algorithm that can predict hits and misses? This isn’t a simple problem; it has hundreds, if not thousands, of variables. So if you want to predict how Benioff and Weiss’ upcoming Three Body Problem is going to do, good luck!