What CBS potentially dropping Nielsen ratings means in the age of on-demand

TV ratings provided by Nielsen have been the gold standard for the media industry for decades, but now CBS is considering ending its contract with Nielsen amid questions about whether their ratings are the best tool for measuring audiences today.

In part, CBS’ movie comes down to money. The network’s contract, estimated at over $100 million per year, expires at the end of the year.

A source told Variety that CBS wants a better deal from the ratings’ provider given there are numerous alternatives for measuring audiences beyond Nielsen’s more traditional linear TV ratings.

Nielsen expressed optimism that the two companies could come to an agreement before December 31, but the dispute also raises an important consideration: do Nielsen’s ratings still have value in an age when people are increasingly less likely to watch TV in a traditional manner?

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When Nielsen first began measuring TV audiences there were only three broadcast networks.

No one could have imagined the explosion of channels that happened, much less the alternative ways of watching TV brought about by streaming and DVRs.

Today, people can take their shows with them, streaming it on-demand through their smartphones and tablets, or via smart TVs. As a result, concern about the date and time a show is broadcast is becoming a thing of the past.

Given the intricacies of this landscape, Nielsen’s traditional ratings are increasingly antiquated and seem much less likely to provide an accurate picture of a given show’s audience.

As a result, other providers have popped up. CBS has invested in services like Comscore to measure their viewers. The network has even started to invest in its own measurement alternatives, including “DNA,” which segments audiences by things beyond demographics, such as their preferences or what kind of car they drive.

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Nielsen has made strides towards new ways of counting audiences as well. After all, in a TV environment that’s exploding with content, being able to more precisely measure and target audience segments is good business.

However, many network executives continue to take issue with Nielsen, because despite strides towards new measurement options, advertising rates are still based on Nielsen’s traditional system.

This reality would make it difficult for CBS to completely sever its ties to the ratings’ provider — at least at this point. Besides, CBS has benefited from Nielsen’s system. They’ve been the top-rated network for quite a while.

However, streaming services like Hulu, Netflix, and Amazon Prime have cut into all the network’s viewer numbers, and by extension, their advertising rates.

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CBS’ stand could embolden other networks to demand better deals from Nielsen and to look elsewhere for different ways to measure their audience.

In an effort to appease the networks, Nielsen has introduced new ratings’ systems that account for things like DVR playback the first three days after a show airs.

In this age of increasingly targeted advertising, however, these measurements may no longer cut it. Especially since Nielsen only measures viewers in terms of age ranges.

Historically the 18-35 year old demographic has been especially coveted by advertisers. However, now that advertisers are able to narrow down audiences to people who may be specifically interested in their product, Nielsen’s ratings by age demographics aren’t nearly as attractive.

In addition, viewers who time-delay — when they see a show by viewing a recording on their DVR — are often fast-forwarding through commercials.

This causes the ads that sponsored a program to go largely unseen by this group no matter what Nielsen’s ratings’ numbers show. So, tying advertisers’ spending to Nielsen’s ratings doesn’t work well on this front either.

The TV industry is in a similar position as the music industry was when it had to adjust to online downloads and then services like Spotify. Nielsen is still the standard ratings’ provider but networks’ reasonable complaints indicate Nielsen may not be able to keep that position if it doesn’t adjust its systems to the times.

In the age of on-demand streaming and DVRs, the way ratings are reported requires a serious overhaul if they are to remain meaningful to both networks and advertisers.

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Furthermore, networks will likely have to rethink how they utilize the ratings’ information, including how they partner with advertisers to produce content and how those advertisers might reach their audiences.

What do you think of Nielsen’s ratings’ system in today’s TV landscape? Is it time for new ratings’ systems to emerge? Have your say in the comments.

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