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Analyst Gives Nielsen Low Rating on SVOD

Analyst Richard Greenfield of BTIG, in a report entitled “Why Nielsen Is Wrong,” takes issue with the ratings company’s recent call for content creators to make it easy for Nielsen to measure how many people are watching shows on Netflix and other subscription on demand streaming services.

“Nielsen is trying to remain relevant in a non-linear, on-demand video world (often ad-free or ad-lite) that has superior forms of measurement to Nielsen,” Greenfield says.

Greenfield also disputes some of the arguments made by Nielsen execs Steve Hasker and Glenn Enoch in an opinion piece published in the Wall Street Journal.

First, Greenfield says that the kind of ratings Nielsen computes for traditional TV set the value of content for advertisers, not its value as part of a bundle purchased by consumers. He notes that while CBS loses money on NFL games based on how many people watch and the ad revenue it generates. “CBS wants as much NFL content as it can license so that it can drive retrans fees as high as possible and ensure there is no way CBS can be dropped by an MVPD,” he says.

Instead, “what you really want to know is how many subscribers would drop Netflix if Orange Is the New Black were not there, how many would not sign-up if OITNB did not exist and how many would be willing to pay more for Netflix monthly because OITNB is on the service,” Greenfield says. “Unfortunately for Nielsen we do not believe ratings are highly correlated to these three unknowns."

Greenfield also takes issue with Nielsen ability to count viewers in the new media environment.

“We live in age where Netflix, Amazon and Hulu know exactly how many people are watching a specific piece of content, with services like Netflix even asking you to identify which family member is watching,” Greenfield says. “As TV shifts to apps, every video creator will know exactly who and how many people are watching their content, without the need for third-party measurement. Nielsen is a ‘dinosaur,’ still relying on a panel of 20K-plus homes to extrapolate TV behavior across the entire country.”

Greenfield concludes that he is not surprised that Nielsen would want access to measure everything everywhere. “Unfortunately, in an app-driven world, there is really no need for Nielsen measurement,” he says.

“While there will always be an array of third-party studios, we suspect Netflix will morph more toward the HBO model, meaning it will need to actually produce its own content. While Netflix is financing other people’s creation of content for them, it is hard to believe Netflix will not be creating content on its own studio lots in the future (new offices in Hollywood include 'stage and production' space according to the LA Times),” he says. “Worth noting as you move to creating your own content and do not sell advertising, ratings are completely irrelevant. While HBO announces ratings for marketing purposes, it has no bearing on its content costs.”

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.