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Will Netflix Kill Ratings For Pay Cable?

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The launch of Netflix’s first original series positions the company right where it wants to be – competing against pay cable companies like HBO, Showtime and Starz. But whether Lilyhammer becomes a hit for Netflix (NSDQ: NFLX) or falls flat, don’t expect the streaming video company to honor one very time-honored TV practice: disclosure about the show’s viewership.

Netflix has said that it will not make any announcement about the audience for Lilyhammer, which has eight episodes, all of which are debuting on Netflix simultaneously. And with pay-cable rivals like HBO stating their own discomfort with so-called “overnight” ratings in an increasingly fragmented viewing world, it could be only a matter of time before they follow Netflix’s lead.

“We already know what our subscriber base is watching and how they’re watching it. We’re not selling advertising, and we don’t need to publish ratings to show how popular our show is relative to a competing network,” Netflix spokesman Steve Swasey said Monday.

A lot of decisions on whether to watch a particular show come down to buzz. So how will the public know that Lilyhammer is worth watching? “If they renew it, you’ll know they are pleased with how many people are streaming the show,” said Brad Adgate, senior VP and director of research for Horizon Media.

But how about impressing the Hollywood creative community? If Netflix is going to compete with cable outlets for shows, doesn’t it want to define itself as a place for hits? “That’s not done with ratings, that’s done with money, and we’re able to write some big checks,” Swasey said.

Even in the realm of premium cable, which also doesn’t rely on advertising, pushing out ratings data the morning after series and season premieres – or often, for each original episode — has been a standard business practice for decades. Take HBO, for example. Viewership for shows like Game of Thrones is now scattered across not only encore runs, but DVR time-shifting and multi-platform service HBO Go. And that data isn’t as useful as it used to be.

You can’t look at the viewership number for Game of Thrones and compare it to an older HBO hit like, say, The Sopranos, because HBO’s viewership model has changed so much in recent years. It’s apples to oranges at this point. The Sopranos could get over 20 million viewers for a single run. Game of Thrones won’t pass 10 million.

Still, after every Game episode, the network puts out an “overnight” ratings announcement, seeking to spin TV journalists, investors for parent company Time Warner (NYSE: TWX) Inc., and the Hollywood creative community that the show is a hit. In recent years, however, executives for HBO and other traditional TV companies have noted the increasing obsolescence of ratings data derived from a single premiere run.

HBO hasn’t called for the industry to stop feeding ratings data to the press, but it has suggested the model change to something less immediate that accounts for viewing on multiple platforms weeks, even months after a premiere. With a new competitor on the scene that doesn’t publish any numbers at all, is it possible they’ll ditch the publication of ratings data altogether?

“The [pay channels] are now in a different arena — it’s streaming, it’s not ad supported, it’s on demand,” Adgate noted.

One Response to “Will Netflix Kill Ratings For Pay Cable?”

  1. Joegreps

    Game of Thrones is a great example, last weeks trailer had 5 Million hits in a week, it was one of the top 10 most searched media terms on the Internet last year and it was the second most pirated TV program last season. Ratings capture none of this, yet Thrones may very well be the most popular program on TV this year.

    All said though, judging by the buzz, the season 2 ratings may more than turn a few heads anyways.