Nielsen Introduces New Ratings for Streaming Services

Nielsen on Thursday announced that it had moved a step closer toward cracking one of the great questions of the modern entertainment world: How big, exactly, is streaming?

In recent years, Netflix, YouTube, Amazon, Hulu, Disney+ and Apple TV have revolutionized the viewing habits of millions of Americans, but the streaming companies have been fiercely protective of their numbers, sharing data on how many people are watching very selectively, if at all.

Now Nielsen, the 98-year-old research firm that for decades has had an effective monopoly on measuring TV ratings in the United States, has a new metric that it says allows it to make an apples-to-apples comparison, on a percentage basis, of how many people are streaming shows and films on their TVs versus how many are watching traditional cable and broadcast channels.

For the time being, Nielsen reports, people are spending more time watching TV the old-fashioned way — but streaming is gaining fast.

On Thursday, the firm reported that 64 percent of the time American viewers used their television sets in May 2021 was spent watching network and cable TV, while they watched streaming services about 26 percent of the time. Another 9 percent of the time, they were using their TV screens for things like video games or watching programs or films they had saved on DVR.

The streaming share is increasing rapidly. It stood at about 20 percent last year, Nielsen said; in 2019, it was about 14 percent. A Nielsen spokesman said that the firm anticipates the streaming share could go up to about 33 percent by the end of the year.

Netflix and YouTube are the streaming leaders, the research firm said, with each capturing 6 percent of total TV time. They are trailed by Hulu (3 percent), Amazon (2 percent) and Disney+ (1 percent).

Nielsen calls its new metric The Gauge. It comes in addition to its previous method of measuring how many people are watching streaming platforms, which relies on audio-recognition software included in Nielsen devices that are now in 38,000 households across the country. Both metrics measure only what is viewed on television screens and do not count what is watched on phones or laptops.

When Nielsen started releasing ratings numbers based on its audio-recognition software in 2017, Netflix was not impressed. Netflix called the data “not accurate, not even close” when Nielsen put out ratings four years ago for the platform’s hit series “Stranger Things.”

Now that The Gauge is here, Netflix is changing its view of Nielsen.

“They’re in a good place to referee or score-keep how streaming is changing the U.S. television landscape,” Reed Hastings, the co-chief executive of Netflix, said in an interview.

Asked about Nielsen’s report that cable and broadcast TV, also known as linear television, continue to dominate viewing habits, Mr. Hastings said he was “surprised” but did not expect it to last.

“It’s kind of obvious there’s a time frame over which streaming takes over linear,” he said. “At 6 percent per year, it’s not going to be long.”

Netflix had long resisted attempts by outside firms to estimate its viewership data, and Mr. Hastings’s vote of confidence in Nielsen’s new metric represents a softening in its stance on third party statistics.

Nielsen also uses the audio recognition software in many of its homes to track the biggest streaming services, including Netflix, Disney+, Hulu and Amazon, and it releases a weekly ratings report on the most-streamed series and films.

Mr. Hastings did not endorse Nielsen’s pre-existing TV streaming series ratings, which are released each week. (“We don’t sell advertising, so it’s not very relevant,” he said.) But he said he was impressed by the new metric, which Nielsen said will be updated monthly.

For The Gauge’s streaming stats, Nielsen measured about 14,000 households through a piece of hardware that observes internet traffic that passes through a router. To Mr. Hastings, that is a more rigorous methodology for streaming measurement.

Nielsen, he said, “used to not be very sophisticated or accurate in terms of internet viewing. But over the last two years, they’ve developed and rolled out new technology at the Wi-Fi router level. And so, for the homes in the Nielsen panel, they now have an accurate view of internet viewing, including Netflix and YouTube.”

“They’re thoughtful people, they’ve been doing this for a long time — I assume it’s pretty good,” he continued. “They have incentive to be accurate.”

Netflix’s approval comes as a boon for Nielsen. For months, the research firm has been under attack by executives at traditional media companies who have accused it of undercounting television ratings during the stuck-at-home months of the coronavirus pandemic.

David Zaslav, the chief executive of Discovery who is in line to lead a media giant if its merger with WarnerMedia is cleared by regulators, called Nielsen’s reporting methods “antiquated” last month. Nielsen acknowledged some undercounting because of difficulties related to the maintenance of devices in some Nielsen homes during the pandemic.

In the past Netflix steadfastly refused to disclose any viewership data, much to the disappointment of rival TV studios and networks. But Netflix now releases some viewership stats for a few of its original series and movies. Late last year, for instance, the company said that “Bridgerton,” the romance series from the super-producer Shonda Rhimes, was the most-watched original series in its history.

At the same time, Netflix shares next to nothing with the public on its middling shows or outright flops. Nielsen releases only Top 10 streaming ratings lists, as well.

Rich Greenfield, a media analyst at LightShed Partners, said Netflix was signaling its approval of The Gauge because the new metric shows that the platform, along with YouTube, is the streaming leader.

“It also shows that 6 percent of time is spent on Netflix, and where’s that going to be in 10 years?” Mr. Greenfield added. “It shows how much long term runway there is over the next decade.”

“And where’s everybody else?” he continued, referring to the other major streaming services. “There’s all this conversation about the streaming wars, but they’re not the streaming wars if only a few companies dominate — and Netflix is one of them.”

To remain relevant, Nielsen must segue into streaming measurement after decades as the gold standard for traditional TV ratings.

David Kenny, the Nielsen chief executive and the former president of Akamai, a cloud computing company, has known Mr. Hastings more than a decade. The two have discussed Nielsen’s desire to ramp up its efforts at measuring streaming and traditional television all at once.

When Mr. Hastings was asked whether or not he had encouraged Mr. Kenny to release the new stats publicly, he replied, “Yes, at a cocktail level. No, at a financial level.”

For Nielsen, The Gauge is an attempt to give a clearer picture of how American viewing habits have changed, one that better accounts for how people flip back and forth between, say, CNN and “Bridgerton.”

“To the consumer, she’s got her remote control, and she’s moving from live sports over to news down to streaming, and back around,” Mr. Kenny said. “We need to bring the whole industry together to a comparable way of looking at this.”