It’s undeniable – traditional television viewership is beginning to reach a point of no return. Primetime is becoming any time, and audiences across the globe are creating their own unique and personalized customer experiences in entertainment through access to streaming services like Netflix and Amazon Prime Instant Video.
Recently, Nielsen announced that it would begin measuring customer engagement and viewership for Netflix and Amazon in an effort to aggregate data to more accurately evaluate the value of video licensing agreements. This move to collect data on streaming services comes as engagement in key demographics for traditional television has seen a marked decline in the past few months. In the third quarter, aggregate TV audience engagement fell 10% year over year, and among prime-time audiences between ages 18 and 49, the decline was 9%.
For media companies, the new insight from Nielsen should help shed some light on the severity in the shift from live-stream to online viewership, data that could have the potential to truly shake things up. Such companies who observe drastic shifts towards streaming site viewership may find themselves stuck like remote controls between couch cushions, forced to license more content to online platforms in order to brace for potential future losses in ad revenue.
“Our clients have been asking for more insight into how these viewing patterns are interacting with traditional distribution,” Brian Fuhrer, product leadership senior VP, Nielsen, said in a release. “This is about them learning how to appropriately value their content.”
The new initiative to understand this shifting customer experience in entertainment will not be all encompassing, as laptop and mobile streaming will not be included in the data gathered by Nielsen. Nevertheless, the increased transparency for media producers should empower companies when negotiating or renegotiating contracts for streaming rights and licensing, which will by extension impact the various content available for customers of the two streaming services.
Netflix has increased its subscriber base in the United States by 20% year over year in the third quarter, and these numbers are not expected to slow. Today’s customers increasingly want to experience an on-demand, ad-free television experience, and they are getting it. However, this sudden shift in the customer experience could threaten to institutionally destroy billions of dollars in advertising revenue over the long term.