Commentary

Beyond Viewer Metrics: Defining The Greater Value Of Netflix

According to recent news articles, the “problem” of understanding how many people watch Netflix programs and who they are has nearly been solved. Regardless of your point of view on these metrics, the bigger question is whether viewership is all that really matters when it comes to Netflix.

Is this the best way to understand the value that services like Netflix provide – to users, advertisers and content creators?

The success of subscription VOD services like Netflix, Hulu, and Amazon Prime depends not just on today’s audience. These companies invest significant monies and marketing effort in their platforms to attract subscriptions on a month-by-month basis -- at which point every subscriber has the opportunity to rethink his or her decision.

So knowing what people watch and when is only part of the equation that drives these businesses. If today’s subscriber is dissatisfied, and remains dissatisfied for a week or two or five, he or she could drop the service for reasons that no passive measurement alone would be able to predict or explain.

Satisfaction – the core of any brand loyalty – can be swayed by a host of factors, and all are relevant to Netflix. Is the household viewing primarily on a new device in a different room? Has the composition of the household shifted, so now different people are watching on the same subscription? Have other sources of the same viewing genres been found? Capturing these ‘intangibles’ requires a deeper understanding of subscription consumers.

Netflix originals make headlines; but GfK data (where I work) on key streaming services reveals that these shows are not always the most viewed, in any given month. Exclusively acquired series can also influence the value proposition for consumers.

Any one piece of content in a bundle is not valued at the same rate by all consumers equally; thus, a deeper understanding of the habits and preferences of each segment of a subscriber base is essential to building a successful bundle. And that matrix changes all the time, as new content becomes popular and fresh entrants put pressure on Netflix to stay in vogue.

As services, then, Netflix and other SVOD options attract not just eyeballs on any given show, or awards for much-hyped originals like “House of Cards.” They generate value by connecting viewers to content that resonates with the bill-payer or someone important in the bill-payer’s households (especially kids)

But the ability to watch what you want when you want also creates different circumstances of viewing. If I want to share a particular show, on demand, with other people in my home, creating an impromptu group “screening,” that is much different than people sitting together to channel surf. The audience members, times of individual viewing, and engagement will be much different – elements that are missed by simple passive viewership numbers.

Through all of these experiences – plus advertising, publicity (good and bad), and word of mouth – SVOD services have created brands that influence subscriber decisions.

If Netflix, for example, does something particularly cool (creating an award-winning show), or uncool (shifting price policies unpredictably), associating yourself with the Netflix name and brand may become more or less appealing.

The fact that Netflix tends to be top of mind among the streaming services is a brand victory, and a source of additional sales. But understanding and tracking the health of the Netflix brand in the minds of different key consumers requires a sophisticated, ongoing research effort.    

All of the complex interactions between platform and viewer that we have been discussing require more than passive viewership metrics. Research needs to get at the value proposition that services like Netflix create.

While just counting viewers may be attractive because it is the industry’s ‘go-to’ methodology, understanding the real importance of these streaming platforms demands more rigor and subtlety – techniques that have already been developed and are yielding essential insights for programmers and brands alike.

3 comments about "Beyond Viewer Metrics: Defining The Greater Value Of Netflix".
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  1. Ed Papazian from Media Dynamics Inc, February 24, 2016 at 10:08 a.m.

    Laura, I hope that GFK-MRI is considering including a SVOD-focused section in its syndicated studies whereby subscribers of each service are profiled in detail---including mindsets---and their viewing patterns for show types and individual series programs is defined, along with metrics like viewer attentiveness, loyalty, ad receptivity, etc. Do that and you will generate a great deal of interest, especially regarding the audience duplication and rating erosion effects on broadcast network, syndicated  and basic cable fare.

  2. Leonard Zachary from T___n__, February 24, 2016 at 1:28 p.m.

    If more folks are watching SVOD on TV than bundled Pay TV does that mean the metrics for audience size would be larger than PayTV, just asking if the metrics for audience size means one thing for Digital and another for old TV.

    If the 5-6%v Netflix share projected by a ratings Pro means lower Audience metric, then No worrries, TV viewership audience size is disconnected from granular data.

  3. Ed Papazian from Media Dynamics Inc, February 24, 2016 at 1:55 p.m.

    Leonard, assuming that I understand your question, if, on average 20% of the total population is watching any form of TV per minute across all dayparts---linear, including DVR playback, plus SVOD---- then the likeliehood is that about half of them are watching cable---basic and/or pay----per minute, hence cable's aggregate share of audience is around 50%. If, at the same time-- and taking the total population, not just SVOD subs --- if 1% of the population is watching Netflix per minute, this translates into a 5-6% share of average minute audience for Netflix. Assuming that someone like Nielsen is able to properly measure average minute viewing the two should be directly comparable.

    What causes some confusion is the base that is or is not used. If, for the sake of demonstration, only 40% of the population has access to Netflix content, the nationwide share of viewing projects to a much higher figure---around 14%----within the Netflix user universe. The actual number of viewers per minute remains the same but it represents a much higher share of viewing when projected against the smaller Netflix user base ( 40% ).

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