The beginning of the millennium saw the growth of DVR usage in homes. The years 2006-2007 brought Apple TV® and Netflix switched from DVDs to streaming. Hulu jumped on the streaming bandwagon in 2008. Around 2012 is when the cable companies began to feel the pains of cable-cutting due to streaming, which has continued to this day. All these changes happened in a relatively short time, but one standard that remains is Nielsen’s monopoly on measuring TV ratings.

Nielsen has been measuring television (broadcast and cable) since 1950. How does Nielsen do it? Perhaps, at one point in time, your family was asked to be a “Nielsen Family.” Being part of these families, randomly chosen, meant that everyone in the household would record their video viewing in either a diary or a set-top box that would record and automatically send viewing patterns back to Nielsen. Age and gender of the viewer would also be noted. Only a portion of viewers would be measured for a program, so the total audience was not included in ratings. This presents one of the criticisms with ratings. Many think the sampling size is too small and does not reflect the total amount of American households with TVs.

Another criticism is the accuracy of what people recorded. There was a potential for error with the diary, as some people may not want to admit that they kept up with the Kardashians. They might write something else in or forget to enter their watching at all. However, Nielsen is reportedly phasing out diaries this year due to these inaccuracies. The set-top box still has the potential for error, though smaller, as the user must select their profile before watching. The errors involved here could occur if the viewer accidentally chooses another household profile that has different demographic data than their own.

From air date to seven days past (for those who DVRed), Nielsen collects views of the show. The rating is a percentage of the total amount of Nielsen households that tuned into a particular program out of all Nielsen households. Advertising uses these ratings to determine ad rates for commercials. Shows with low ratings get canceled, as ads during these shows aren’t as expensive or as desired by advertisers. However, streaming has threatened all of this as consumers increasingly cut cable.

“Breaking Bad” told an interesting story about ratings and streaming. While ratings were good enough for multiple renewals and steadily increased in the earlier season premieres, the last season doubled in ratings after previous seasons were available on Netflix. That kind of increase is rare and is thought to be attributed to streaming, as mentioned in this Variety article. A new audience had time to catch up on previous episodes and then tune into cable for the last portion of the season.

This begs the advertising industry’s next question; how to measure streaming? During next month’s newsletter, I’ll look into at least one way the industry is measuring this golden age of TV.