Perhaps the hottest secret in the television industry right now is what sort of viewership Netflix pulls.
Though the streaming service dominates our current discussions of TV unlike any network not named HBO, nobody knows definitively how many people watch its shows — except for those who work at Netflix. The company is transparent about how many subscribers it has, and it annually announces how many hours of content were streamed in the previous year. But it doesn't break things down by program.
And that curiosity exploded at the recently concluded Television Critics Association winter press tour, where NBC announced Netflix viewership numbers that it purported to be very real. In doing so, NBC showed just how hard it is to make an apples-to-apples comparison between Netflix's viewership and traditional TV viewership — but it also revealed why Netflix's numbers will probably be public knowledge sooner or later. (As always, NBC's parent company, NBCUniversal, is an investor in Vox Media, which publishes Vox.)
NBC's numbers illustrate how hard it is to quantify streaming viewing
FX president John Landgraf — a longtime critic of Netflix's refusal to release numbers — threw water on NBC's numbers, saying the Symphony app NBC used to tally its measurements (which listens to what you're watching via your smartphone) doesn't have a rigorous enough statistical method to come up with something akin to the industry-standard Nielsen numbers. (Netflix itself just said that the NBC numbers were categorically incorrect — though, of course, who can really know?)
But let's assume for a moment that the NBC numbers are completely accurate. Let's say NBC came up with exactly the viewership Netflix saw in the 35 days NBC measured. It still wouldn't be a great method of comparing Netflix's numbers to those of a traditional broadcast network, because the two have such different models.
The reason NBC was crowing about these Netflix numbers as if they were absurdly low is that from NBC's perspective, they are absurdly low. In essence, what NBC is measuring is Live+35 viewership — or the number of viewers who watch a program within 35 days of its first airing. And from that point of view, every show on NBC almost certainly trumps every show on Netflix in raw viewership totals.
But NBC, crucially, can't really monetize Live+35 viewership. With every day that you don't watch one of its programs on your DVR or on streaming (assuming, at least, that you watch the ads when you play it back), its value decreases a little bit in the eyes of NBC proper.
That's because most advertisers are deeply skeptical of anything beyond raw live viewership, as much as networks try to move to basing their ad sales on Live+3 or Live+7 numbers. What's more, advertisers pay a premium to reach young viewers, and the younger they are, the better.
Netflix's entire business model is Live+Infinity. It's predicated on the idea that when you fire up the streaming service, the stuff you want to watch will always be there, whenever you want to watch it. And for that convenience, you'll pay subscription dollars. So Netflix doesn't care when you watch or how old you are. It doesn't care about any of the other things that traditional networks need to worry about.
There may eventually come a day when Netflix's business model looks shortsighted and silly — after all, there is probably a ceiling of total Netflix subscribers, and the service has yet to show how readily it can find ways to pay for programming to suit all those potential subscribers without busting its budget. But for right now, things are going great, and Netflix shows no signs of slowing down. That's put a big target on its back, and that's why I think there are three big reasons the eventual release of Netflix's numbers is inevitable.
Reason 1: Netflix likes to brag
As I explained in 2015, there are plenty of good reasons for Netflix not to release any numbers whatsoever. Since it's not beholden to advertisers, a TV program is worth it to Netflix if it inspires a certain number of subscribers to stick around — similar to how HBO functions. And Netflix does release its subscriber count with its quarterly earnings report.
But at the same time, much of the Netflix hype machine is driven by its occasional whispers of just how many people watch its shows. It has claimed, for instance, that more people watch Narcos than have watched Game of Thrones, and it's also shared numbers or rumors of numbers for its first two original films, Beasts of No Nation (3 million) and The Ridiculous 6 (a "viewership record").
Now, I can explain away those numbers if I really try. I would bet that Netflix is comparing Narcos season one viewership to Game of Thrones season one viewership — an important distinction to make, as Game of Thrones wasn't nearly as popular in its first season as it is now. I would also guess the service isn't planning on Narcos exploding in season two like Game of Thrones did. But the bragging does seem to run counter to the service's principles of protecting its data at all costs.
Interestingly enough, Netflix finds itself in a similar position to the one HBO was in back when Sex and the City and The Sopranos launched and then grew huge. At the time, HBO avoided revealing its viewership totals — just like Netflix does now — and would frequently say that any Nielsen numbers released for it were faulty.
Eventually, however, HBO's bragging about its performance caught it in an endless feedback loop, where it would say a certain show was doing amazingly well, some other network (or Nielsen itself) would say it wasn't doing that great, and on and on. Ultimately, HBO just started releasing its numbers, which it does to this day.
Is the beginning of something similar happening with Netflix? It's possible. But there's another reason the release of Netflix's numbers is on the horizon, closely tied to this one...
Reason 2: Somebody will figure out how to measure streaming viewership
This is the biggest arms race in TV right now. Sure, the Symphony app NBC used has its flaws, but those will be ironed out in time. Nielsen itself is exploring the idea of using similar smartphone apps to track streaming viewing. And Netflix is surely trying to figure out its own systems to circumvent these ideas.
But the point is this: If Netflix's chief advantage is its technology, in the sense that watching TV on the service feels infinitely more convenient and easy than any other method of viewing out there, then improved technology for monitoring what we watch and when — something the entire television industry has been working on since long before Netflix launched its streaming service — is also going to eventually make it possible to figure out what people are watching on Netflix and when.
That research will be very expensive — after all, as Netflix's Ted Sarandos points out, the service has thousands of possible options for viewing. But as NBC's experiment with Symphony has shown (to say nothing of the way CBS has occasionally tossed out tidbits it claims to know regarding Netflix viewership), there are deep-pocketed companies that want to puncture the Netflix bubble just a little bit by revealing how deep (or shallow) its cultural penetration really is. And they'll probably succeed eventually.
Reason 3: Netflix will have to start re-upping its deals with production studios
And while that's the state of things right now, it's not likely to last, because when the company starts cutting deals to keep its currently existing content for another contract (or two or three), the studios it's negotiating with will eventually want to know how valuable their products are to the streaming service.
Think of it this way: If Netflix is drawing in lots and lots of viewers because of Orange Is the New Black, then that show is worth top dollar to it. But if Lionsgate (the studio that produces the show) doesn't know how many viewers Orange Is the New Black pulls, it walks into contract renegotiations at a disadvantage. Thus, it's to Lionsgate's advantage to figure out just how valuable Orange Is the New Black is to Netflix, in order to collect the maximum amount of money.
This is a bit of a frivolous example — Netflix has clearly invested heavily in Orange Is the New Black over the years — but the negotiation argument becomes more compelling when you think about how much of the content on the service is licensed from other TV networks that are increasingly uneasy about getting into bed with such a strong competitor.
Thus, networks have a two-pronged reason for outing Netflix's viewership numbers — if they're huge, the competing networks can charge more for Netflix to license their programs; if they're small, the competing networks can insist Netflix isn't as omnipresent as it seems to be.