Commentary
Lower TV Ratings? No Problem, We Sell To Netflix
- by Wayne Friedman , Staff Writer, December 10, 2014
Digital streaming video is on the rise, especially from subscription video operators like Netflix, with just under 40 million U.S TV homes.
Now David Poltrack, chief research officer of CBS Corp., says Netflix has had a hand in why there has been 3% decline in TV ratings – an idea that also jibes with other analyst’s theories.
“The ratings have just disappeared,” Todd Juenger, a media analyst with Bernstein Research, told the New York Times. “You have audiences leaving ad-supported television for non-ad-supported television, and I don’t think that they are coming back.”
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But at the same time, you have Netflix, which isn’t interested in that traditional TV data. Ted Sarandos, chief content officer at Netflix, has said a number of times that Netflix isn’t focused on TV ratings -- at least how they’re traditionally presented. Why? One reason is that the platform doesn’t air commercials.
While network and programming execs might say they don’t like Netflix’s no-ads or ratings reports policy, there’s still an upside to working with the company. For example, CBS sells older season shows to Netflix. “You have to look at the big picture,” says Poltrack. “Yes, Netflix is a formidable competitor. But they’re a valuable partner as well.”
So what’s the net revenue-profit outcome? Someone hopefully has a good trend-line in figuring that out.
While we wait, there is the continuing disparity of digital versus TV, with digital advertising revenue overtaking TV advertising dollars in a few years. Again, it’s a two-sided equation for traditional media: CBS, and other networks, will be participating in that digital part of the media equation.
For those companies, it isn’t only older library or recent off-network shows. There is speculation that the TV networks/media companies might also be producing programming for for Netflix and similar platforms. License fees from the likes of Netflix may be growing -- and digital advertising for TV reruns may be growing as well.
But the question might remain for those ever-dwindling TV ratings in the digital age: What do they reveal? What’s their ultimate point?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
For the most part, it's not a question of viewers completely deserting the broadcast TV networks and never returning but, rather, of viewers reducing their frequency of network program consumption as they split up their time among more content suppliers. It is obvious that the networks will have to balance the incomes they garner by licensing their programs to Netflix and others against potential losses in ad revenues caused by declining ratings for their "regular" programming due to the ensuing rating fragmentation. At this point, advertisers still seem willing to fork up billions of dollars for network buys every year. Until that changes, the networks will have to proceed carefully in selling their content to alternative viewing platforms---even if that content is "old" episodes, not those currently being aired.