Will Big Data Replace Ratings?

by George Simpson, Feb 15, 2013, 7:00 AM

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Netflix says it doesn’t release any ratings for its original content -- even “House of Cards” -- choosing instead to measure its success with "a balance of intuition and analytics,” including “really big data” on engagement levels with each individual piece of content, as well as the mix of content each subscriber is watching. “When you say ten million people watch a show, that really doesn’t tell you anything,” Netflix Chief Content Officer Ted Sarandos said at the All Things Digital’s Dive into Media gathering this week.

Apparently a ratings-free approach is also appealing to creatives  (even though they would have to work with a different economic model). “The model is going to change,” said “Arrested Development” creator Michael Hurwitz at the same event. “The trade-off is that we are encouraged to make a more interesting show as opposed to flattening it out [to meet the expectations and standards of the major broadcast networks]," he said, as reported in coverage of the event.

I doubt anyone at the Nielsen/Arbitron audience measurement combine is losing any sleep over this concept. Ratings have been the lingua franca of the television business for nearly its entire history, used to determine which new shows survive from year to year and which ones get the lion's share of marketer ad dollars. Sarandos suggests that data can provide richer insights and he can live without the overnights. Hurwitz sounds pretty pumped about not having ratings decide the fate of his shows, allowing him to create edgier programming that might appeal to smaller audiences.

Allow me to float a turd in this punchbowl: scale.

At the end of the day, ratings -- as flawed and imprecise as they may be -- are what we have to live with until data becomes actionable enough to replace them. There are lots of folks out there -- including my client Simulmedia -- developing ways to translate better viewing data into improved advertising efficiency.

But even with data as the new lingua franca of advertising, it all breaks down if programming can't deliver audiences of significant scale. While Netflix may be enjoying a moment in the sun thanks to its $100 million purchase of two "seasons" of nastiness from Kevin Spacey and Robin Wright, it remains to be seen if it can attract enough new subscribers to stay in business without advertising support. Can individual subs outflank the revenue that premium cable gets per subscriber from the MSOs? I don't think so.

The theory of matching the scale of audiences provided by top network shows with an amalgam of viewers spread all over the distribution map -- from mobile phones to tablets, from Internet-delivered to newfangled roof antenna -- suggests that a media buyer would rather spend three weeks piecing together the parts (and the various creative units necessary to optimize on each platform) than make one phone call to a network. Look no further than the prices paid for Super Bowl spots and the fact that overall TV spending is up (perhaps because it costs more to buy less these days), and you have your answer.

Make no mistake -- I am more than willing to pay for better programming (violent death, ubiquitous profanity, full-frontal nudity, complex plots, etc.), especially if there are no ads (which is why my cable, Netflix and Amazon TV bills run to over $300 a month) -- but are there enough of me out there for the ad-supported nets and Nielsen to worry about?

Perhaps not today. But there is always tomorrow. 

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