• by Joe Mandese  @mp_joemandese, May 4, 2005

Ever since 1985, when Nielsen Media Research began keeping tabs on such things, the number of TV channels received by the average household grew along with the expanding TV universe. Then last year, it inexplicably declined by two, dropping from 102.1 in 2002 to 100.4 in 2003. Now, according to a new report released late last week, that number has fallen even more precipitously, declining to 92.6 in 2004. But the latest decline has less to do with how people actually watch TV than it does with changes in the way Nielsen defines a TV channel. According to Nielsen's new rules, which were unveiled to clients on Friday, a TV channel will not exist as a unique entity unless it is monitored and reported by Nielsen, even if it appears on a viewer's local TV dial, or set-top box.

The changes were prompted by Nielsen's transition from analog to digital TV, and the fact that its new digital TV metering system - the so-called A/P meter - cannot identify channels unless they are digitally encoded. As a result, all channels that are not encoded will be lumped together as a single channel. Similarly, Nielsen said all video-on-demand channels programmed by cable and satellite TV operators will be listed as a single channel

Channels Receivable Methodology: Example

                                     Old Count  New
Count  
6 VOD Channels                               6          1  
4 Non-Monitored/Non-Encoded Channels         4          1  
4 HBO 'Plexes'                               4          4

6 Broadcast TV Stations                      6          6  

Source: Nielsen Media Research.

Aside from being a technical solution to a digital metering problem, the decision represents a smart tactical move for Nielsen, giving all TV outlets an incentive to become encoded if they want to be included in the Nielsen universe.

The effect on the TV universe is mainly symbolic. Advertisers and agencies don't plan media buys based on Nielsen's channels "receivable" data, but it has served as a useful chronicle of U.S. TV viewing environments. When combined with a second piece of data, the number of channels actually "tuned" by an average household, the impact of a burgeoning multichannel TV marketplace became evident.

As a result of the change, 20 years worth of historical data go out the window, marking another in a series of redefinitions and recalibrations of TV viewing and the TV universe Nielsen is adopting as it makes the transition to digital TV. Other big changes include the inclusion of digital video recorder households beginning this year, and a plan to begin prompting people meter households based on time intervals, as opposed to when they turn on the TV set or switch a channel.

Meanwhile, Nielsen's new TV channels method indicates the average TV household received 92.6 TV channels in 2004, up from 85.8 in 2003. However, the average household only tuned in 15 of those channels, meaning they watched them for 10 or more continuous minutes during the week of Aug. 30 to Sept. 5, 2004, the week Nielsen surveyed them. That means the average TV household watched only 16 percent of the channels that were available to them. The new data also indicates that the more channels a household has available to it, the lower the percentage of channels tuned. In the most channel-rich TV households, those that have an average of 157.3 channels available to them, only 19.4, or 12 percent, were actually tuned.

Average Number of TV Channels Receivable

        New Method    Old Method  
1985            NA          18.8

1990            NA          33.2   
1995            NA          41.1   
2000          61.4          74.6   
2001          71.9          89.2   
2002          79.7         102.1

2003          85.8         100.4   
2004          92.6            NA  

Source: Nielsen Media Research's "Television Audience 2004" report.