Traditional TV vs. Netflix, Etc.? Not A Fight That Can Be Judged With Precision

John Landgraf TCA - 2011

Few people are as savvy about television as FX's John Landgraf, and in the back of the room prior to the FX session at TCA on Wednesday, he was wondering aloud about what the hell a "stream" really means and how it can be counted.

Whether it's Google or Amazon or Netflix or Hulu, there's a certain desire from people in the television industry to accurately gauge how shows perform. Of course the traditional model -- flaws and all -- are the Nielsen ratings. But Landgraf noted that when someone watches only a quarter or three-quarter of one of his shows, how that's counted is different from how someone who watches, say, a full-hour show is counted. It's an aggregate. But if someone streams a video and stops it after 30 seconds because it was an accident or four minutes because they got bored, does that count as said show being "streamed" one time?

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All of this was coming up at an interesting time. FX was the first cable channel to present Wednesday and then Netflix, which has become (or is about to become) a major player in content production was up next (followed by DirecTV, with its original series, Rogue, and Blip, the online content company, presented three of its web series). The trouble is Netflix, which is about to unveil two of the most anticipated new series (the drama House of Cards and the resurrection of the comedy classic Arrested Development), is not really interested in ratings.

It's not how they do their business. Anyone who wanted to know how Lillyhammer did wasn't given any ratings evidence, just a reminder that it's not important to judge the old school way. Meaning, Lillyhammer was added value to Netflix customers who could enjoy the entire season when the episodes went up en masse, or they could enjoy them one by one at their leisure. In fact, they can still enjoy them. It's an evergreen thing.

The only trouble with that is the television industry truly wants to judge just how effective this outside threat -- Netflix in particular -- is to their business model. And they can't accurately compare if those outside threats aren't measured with the same service.

(HBO, Showtime and Starz aren't obligated to release ratings information either, since their subscription model is vastly different from the networks' ad-supported model, but they often release ratings results anyway. Netflix isn't intending to.)

So, as everyone awaits House of Cards and Arrested Development, among other new original scripted series from new world content creators, it looks like apples will remain apples and oranges will remain oranges and never the two shall be sliced onto the same plate. For his part, Landgraf didn't think that was measurably fair. He certainly understands that viewing options are different -- On Demand from cable, the Netflix option (nonlinear) and more traditional television (linear). But comparisons from there will be difficult.

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"I think we will, as an industry, also find some advertising solutions surrounding that nonlinear consumption," Landgraf said. "I don’t think it will be the same amount of ad load that we have in a linear broadcast. But I think it will be fewer ads, and they’ll be more targeted ads. So they’ll have more value on CPM basis, and it will kind of all even out. We have to do that when half of our audience, half is not watching the linear broadcast. Obviously, our ad sales revenue is going down and down and down. As it stands, aside from Walking Dead, I doubt there’s ever been a scripted basic cable series that’s ever paid for itself with its advertising. So we’re already in the hole. We’re getting deeper and deeper into the hole, but it’s also the case that so far no nonlinear service has ever created what I would define as a hit, never. And I’ve said this before. Look, I have a lot of respect for Ted Sarandos. I’m looking forward to watching, you know, the shows that he’s producing.

"But if he doesn’t release comparable data...,we get the average number of people who actually watch the entire episode. That’s what you’re reporting. If he doesn’t release that, how will you determine if something’s a hit?" Landgraf added.

"If I don’t know that he or Yahoo! or Google or anybody has actually created a hit, not by scheduling something day and night and allowing an audience to build over time through word of mouth, but by actually putting it in nonlinear service, I’m not going to follow. No matter how much hype there is, I have to see the data that proves that you can create a hit that way or I’m not going to follow it, and I’m dubious right now that that industry is ever going to release the data because I think they like the fact that they don’t have to have a report card. And, you know, maybe if I didn’t have to have a report card, I wouldn’t want one either. On the other hand, I think report cards are good because they keep you honest, basically. They let you know whether you’re getting an A, B or C, and if you want to be a better student, get a grade and find out how you’re doing."


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