Nielsen TV ratings will finally start to include cord cutters

watching netflix Covered by the New York Times Media Decoder column earlier today, the Nielsen measurement company is initiating new plans to start measuring consumers that watch television shows online and incorporating those findings into the core rating system used by television networks and advertisers. Conceptually, Nielsen will attempt to measure the portion of the U.S. population that strayed away from premium television services from cable or satellite providers and have opted into online video subscription services such as Hulu Plus, Netflix or Amazon Prime.

amazon on rokuIn addition to measuring people that watch streaming online video in the home theater on an Internet-connected television, Nielsen will also be measuring viewership on mobile devices such as smartphones and tablets like Apple’s iPad by 2014.

As this data is collected, Nielsen hopes to provide greater insight into how consumers are experiencing advertising through online video services in addition to providing television networks with a more exact outlook on the popularity of specific shows.

While a sitcom or drama may not be performing well in front of a traditional television-watching audience, the same show could be flourishing in front of an online audience. With this new data, a television network could eventually make a decision to continue producing a show that’s very popular with an online audience, exclusively distribute the show online and free up space in the weekly schedule to test new shows. Of course, the network would need to make enough money through online advertising or premium subscription fees in order to continue supporting production of the show.

cordcuttingWhile the percentage of U.S. households that fit this mold is small at the moment, it’s inevitable that most people will consume television shows online as more Internet-connected devices are incorporated in the typical home.

Regarding the growing practice of cord cutting, Dish Network CEO Charles Ergen said “I think cord-cutting is here to stay and will accelerate over time.” When asked about attracting younger audiences to premium TV services, Ergen continued “There’s a reason tobacco companies give away free cigarettes on college campuses. I think we need to hook people on Pay TV when they’re young and we’re not doing that. If we don’t, we’re going to get run out of town.”

The Nielsen organization has mulled expanding the ratings system to include online viewership for the past couple years, but recently accelerated the decision as the growth of Web services like Aereo offer the ability to watch high definition streams of network programming on the Web without requiring an antenna. Aereo is also planning a rapid expansion into twenty-two other cities within the United States such as Chicago, Atlanta, Dallas, Denver, Boston and Miami. 

According to Nielsen senior VP Pat McDonough, Aereo usage will be included within the revised ratings. It will also include any type of upcoming streaming video device from Intel or current set-top boxes like the Roku or the Apple TV. In addition, television shows viewed on gaming consoles, like the upcoming PlayStation 4, will be included within the revised ratings. According to the Hollywood Reporter, Nielsen plans to have the new hardware and software in place to measure online viewership prior to the start of the fall 2013 television season.  

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