It's been 63 years since Nielsen started measuring what we're watching on TV. For most of that time, the concept of "TV" has pretty much remained the same. But in the last half decade, the old model has been blown wide open by the Internet as more people go online to catch their favorite shows. To stay relevant, Nielsen is being forced to change its methodology.
By the time the 2013 fall season begins, the 23,000 homes Nielsen uses to sample TV viewership will be equipped with a new system that takes Internet content into consideration, according to a scoop by the Hollywood Reporter.
Piecing Together Fractured Viewing Habits
The report was short on details, but from the looks of it, Nielsen is going to start tracking select online video sources like Amazon, Netflix and Hulu as well as streaming devices like Xbox 360 and other gaming consoles. By the end of the year, TV viewership from iPads will be counted as well. That's good, considering the rising popularity of iPad apps like YouTube, Netflix and Hulu Plus and the ongoing push by cable operators and networks to make shows available on tablets.
It's not clear which online content sources will be tracked at launch, since participating in Nielsen's ratings measurement system will require opt-in technical changes to the way those videos are encoded and streamed.
"On the path to capturing all viewing in all homes, this foundational change addresses the lion’s share of viewing, in effect including any home with a TV that can receive video via an external source," Pat McDonough, Nielsen's SVP of Insights and Analysis told ReadWrite via email. "In collaboration with clients, we will continue to expand the reach of television audience measurement."
This isn't the first Internet-inspired change Nielsen has made to its methodology. In December, it announced a partnership with Twitter to launch a new social TV metric that will take into account the social chatter about popular shows.
It's all part of Nielsen's larger plan to more accurately track media consumption habits that are increasingly fractured across time, devices and sources. Since the advent of TV, there's never been a change this dramatic in how people consume it. The seismic shift that's happening now calls for an equally significant retooling of how various aspects of the industry function. In a business fueled in large part by advertising, there are few moving parts more crucial than accurate audience metrics.
Perfect Timing: Internet TV Is Growing Up
The ratings updates come at a pivotal time for Internet TV. Online video has more than 182 million unique viewers watching 38.7 billion videos, according to ComScore's U.S. Digital Future in Focus 2013 report. The most popular video service remains YouTube, followed by Hulu, Vevo, Yahoo and AOL, in that order.
And we're not just talking about Justin Bieber songs and viral kitten videos anymore, either. In the last few years, YouTube, Netflix and Hulu have all been investing heavily in the production of their own TV-quality content.
2012 saw a few Web original shows amass a notable amount of buzz online. This year, shows like Netflix's House of Cards are finally starting to grab the attention of everyday, non-cord-cutting viewers and generating almost as much discussion as popular shows airing on A&E or HBO. In May, Netflix will exclusively stream the fourth season of Arrested Development, a cult classic show whose low ratings got it booted from Fox a decade ago. Like House of Cards, the show is expected to draw plenty of attention, not to mention more new media pundits pontificating about the future of TV.
Online TV Ratings Could Help Fuel The Future
How many people will watch Arrested Development? We won't know, unless Netflix decides to tell us. And if it doesn't perform as well as hoped, why would it bother? The company declined to release viewership numbers for House of Cards, saying it had "no motivation" as a non-advertising based business to do so.
That's true, but without an integrated, cross-platform method for tracking viewership, nobody inside or outside the industry has any way of knowing how popular a given show truly is. That's chiefly useful for advertisers, but such insight is valuable to plenty of others.
There could hardly be an example more illustrative of the need for such a system than Arrested Development. The show got its start on broadcast television. As a Netflix exclusive, season four will be different only in how the episodes are released - all at once, rather than sequentially. Other than that, it will be very much the same show: Same dysfunctional family played by the same actors, presumably picking up the story line (or at least general premise) of the original. It's still a TV show, so why not measure it like one?
As a journalist, I would love to know how well the new season does compared to the original three. Hell, I'd be curious to see how many views those first few seasons have racked up on Netflix since they've been available to stream.
It's not just reporters, researchers and media nerds who could benefit from those insights. This is the first time a television show has made the transition to an online-only service. Will it work? Plenty of other content producers and streaming providers would love to know, and sharing such data could help inform future decisions about premium video content, potentially helping to shape TV's future.