• by Joe Mandese  @mp_joemandese, February 18, 2005

In an effort to defuse mounting industry pressure for independent, third party research to make its TV ratings methods more accountable, Nielsen today will announce a plan to fund $2.5 million in methodological research on TV audience measurement. In a separate, but equally significant move, Nielsen will inform clients it is delaying measurement of digital video recorder (DVR) households until 2006. The two bombshells are part of a series of announcements that will set a new agenda for TV audience measurement into the foreseeable future.

The moves come amid acute industry and governmental introspection of Nielsen's methods, as well as suggestions to either stimulate new competition for Nielsen or to create an independent industry consortium that would be responsible for overseeing improvements in TV audience measurement.

That specific recommendation was made by the Media Rating Council in a letter to Congress and the Federal Trade Commission that was signed by more than 60 members, all leaders of research at major agencies and TV companies (MDN Jan. 31). The MRC, which was founded in the 1960s following Congressional hearings on TV audience measurement, has also been asking the government to clarify its role with regards to oversight of Nielsen.

As part of today's announcements by Nielsen, the company, owned by Netherlands-based VNU, will extend an olive branch to the MRC, making a statement that reaffirms its commitment to the council and its auditing and accreditation procedures, well-placed executives tell MDN.

The move to fund and have some direct input on an independent methodological research authority, however, would seem to circumvent the MRC's role in that process.

In January, the MRC called on Congress and the FTC to endorse an industry-funded consortium whose main purpose would be to develop "better measurement techniques," something the TV industry has not had since the broadcast industry's Committee on Nationwide Television Audience Measurement (CONTAM) disbanded some years ago.

While explicit details of Nielsen's overture were not known at presstime, MDN was told Nielsen would allocate $2.5 million to the effort and would contribute a half dozen of its own researchers to the team. The budget and the Nielsen researchers would work independently of internal Nielsen R&D efforts overseen by Chief Research Officer Paul Donato.

While the DVR announcement is not directly related to the independent research initiative, it is also a significant move that is bound to generate strong, but mixed reactions from Nielsen customers.

On the one hand, some customers - mainly TV companies whose ratings will be adversely affected by the inclusion of DVR households - will likely welcome he reprieve, which will give them more time to adjust their business models. On the other hand, Madison Avenue will likely fume over the move, which will only delay a more holistic picture of how people are actually watching TV today.

When Nielsen originally unveiled plans to measure DVR households last year, penetration of the devices was estimated to be about 5 percent to 6 percent of U.S. TV households. By the time Nielsen begins installing meters in DVR homes in January of 2006, that penetration figure is expected to be well over 10 percent.

"That's 10 percent of all households that will have been bypassed," says one Nielsen customer.

It's unclear exactly what Nielsen's rationale is for the delay of DVR measurement, which was originally supposed to begin in spring of this year, but observers speculated it might either be due to technical reasons, or economic ones.

One positive aspect of the delay, however, is that Nielsen will introduce DVR ratings in 2006 with a new element: same-day ratings of both live and DVR playback viewing. Previously, Nielsen had planned to only release same-day ratings for live viewing, followed by DVR playback ratings based on seven days of viewing.