Netflix data: Why is it important for us to know?

I have been following the OTT platform wars keenly for over the past two years. Even though I have been looking forward to the launch of Apple’s streaming service, Disney+ and the upcoming WarnerMedia streaming service launch, I have had one major concern. Are the viewership number shared by these companies, especially Netflix, really accurate?

Needless to say, the content streaming wars are heating up in Hollywood and the world over. New video streaming platforms are mushrooming in developing nations where the penetration of the internet is not very high. These platforms are banking heavily on the fact that the big four – Netflix, Amazon Prime, Apple and Disney+ – may not be recognisable brands. Also, the focus of these brands is shifting to another paradigm. Their focus is no longer on TRPs and viewership alone, it is now a fight for email addresses and credit card/debit card information.

And for this, they are wooing potential investors by highlighting how easily they are able to get new subscribers onboard. For example: Netflix, the world’s largest OTT platform, claims to have over 139 million subscribers. Amazon Prime video on the other hand is a different ball game. Because it has clubbed its video service with the Amazon Prime business model, nobody knows for sure how many people actually use their video service. And as for the others, well let’s just say, they don’t match up to these numbers.

The reason I bring up viewership numbers is because Netflix has gained notoriety for not releasing its viewership numbers. Mind you, not subscribers, but viewership numbers. Being a publicly traded company, they are bound to release subscriber numbers because that is their sole revenue generation source. By viewership, I mean how many people actually watch a series or an movie, a Netflix original or otherwise.

Viewership Data

On Tuesday, April 16, Netflix held its annual meeting with its shareholders. And in that meeting, it revealed that it added close to 9 million subscribers in 2019’s first quarter. And it projected a slower growth in its subscriber base in the upcoming quarters. Not just because of impending competition from Apple and Disney+, but because they claim they already have a large base. In that meeting, it also shared viewership data for certain movies and television programmes. As reported by Indiewire: Netflix announced that “Triple Frontier” was viewed 52 million times in its first month, with “The Highwaymen” on track for 40 million in a one-month period. This means that ‘Triple Frontier’ was watched more than the Game of Thrones season eight premiere.

But the biggest concern here is that figures as stated by Netflix have no independent verification. It is what the company claims. GoT’s viewership numbers (17.4 million) were provided by Nielsen. Netflix considers a show or movie streamed upto 70 percent as one view (or so they claim). How Nielsen counts its viewership is: Nielsen television ratings are gathered in one of two ways: Viewer “diaries,” in which a target audience self-records its viewing or listening habits. … These devices gather the viewing habits of the home and transmit the information nightly to Nielsen through a “Home Unit” connected to a phone line.

So Netflix is banking heavily on the fact that their viewership is taken as a metric to measure ticket sales. So hypothetically, let’s say one Netflix user, is one ticket sold. That means Triple Frontier with 53 million views had a gross box office of close to $300 million. That is almost every filmmaker and performer’s dream come true. Success at the box office and increased viewership that will keep on increasing.

How this skews future content generation

Because the data for post-theatrical performance for movies has to date been a quagmire no-one has been able to navigate, no sales indicators can be given to compete with ticket-sale metrics. So, all movie studios work with estimates. This, however, is not a concern for video-streaming platforms. Netflix and other similar platforms can track every time a subscriber watches a program, and how much is viewed. So that makes its much easier for them to gauge the performance of its shows and movies. This makes it much easier for it to create more content that is tailored to the viewing habits of its subscribers. This ensures a sense of loyalty in its customer base and also lured potential subscribers to its platform.

This has been both a blessing and a curse for Netflix. On the one hand, more and more networks are willing to sever ties with Netflix because of other video streamers coming into the market. On the other hand, Netflix is able to make more original content for the audience. Representatives of Netflix have gone on the record and said that their most successful programmes (most watched and critically acclaimed) are Netflix Originals. Again without independent verification, we just have to go with these claims. Netflix fiercely guards any and all company data and there are seldom reports of any leaks too. Given their network in close to 200 countries, they have data to alter content as per requirements. This may just be the edge it requires to get ahead of the impending competition.

To give you an insight into just how Netflix is uses this data: Netflix currently has more than 150 original shows and movies in its kitty. And it plans to create and release close to 600 more of the same in coming years.

So, what’s Netflix’s deal with data secrecy?

Like I mentioned before, viewer-habit data helps Netflix create more shows that are tailor-made to the requirements of the viewer. This metric also helps it gauge the changing viewer-habits and will help it adapt to both the changing times and changing desires of the audience. But beyond this there is one key area where it is bound to help out. To stay ahead of the competition. With Apple and Disney+ set to launch by the end of this year and other media organisations like WarnerMedia gearing up to launch their own platform, access to this data gives a huge advantage to Netflix.

So far Netflix has been successful in shirking any form of competition from Amazon. Especially when it comes to creating more original content. And though Netflix has racked up a $9 billion debt to create more original content in 2019, things are only looking up for them. Amazon, on the other hand, is pouring a lot of money to get more and more talent under its domain. With the impending release of Good Omens and the release of critically acclaimed series ‘Hanna,’ things may get better for them too. However, they may not be able to cut down on the lead that Netflix has over them. Netflix however is looking to buy the venerable Egyptian Theatre in Hollywood to release its movies. While Amazon and other studios already have a production wing to support their releases, Netflix does not have this option. Because is a video-streaming platform only, different rules apply to its movies that want to become award-contenders.  

The last thing about all the data secrecy is that Nielsen primarily deals with television metrics that determine ad rates and provide key-demographic data. And Netflix needs neither of them to feed its employees. Or its talent.

But, will it help with the impending competition?

Now that Apple has revealed that it will launch its streaming service this fall and Disney+ will start streaming by later this year, competition is going to be at an all time high. But two pertinent questions arise from these decisions: Will the market become swamped with too much content? and two: How will this affect our monthly budget for content watching?  

Netflix CEO Ted Sarandos is of the belief that this move will not harm the bottomline of the industry and will be a big win for the viewer. “More content is best for the audience. They will have a lot of options to choose from now.”

On the other hand, it may not really affect our budgets much. Even though Netflix raised its prices by $1 and 2 in April owing to its rising content demands, Disney+ announced that it will be available for as little as $6.99 per month for its customers. Though Apple is yet to announce the price point of its service, chances are that the price is going to be same as the others and not too high. Even other services that are going to come up: that of WarnerMedia and others may also compete at the same price point. So, maybe it will come down to the audience’s personal preference in the matter and their content watching needs.

Market gurus have said that Apple may have an edge over its competition in this avenue because it already has 1 billion plus devices already. So if they find a way to provide their service to even 50 percent of their device users, it will still blow the competition out of the water. But it may take Apple a few years to reach that milestone.

 

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