What does it mean to “watch” a show on a streaming service? For Netflix Inc., it now means viewing at least two minutes.
The streaming service noted in its first quarterly earnings report of 2020 on Tuesday that it has changed the definition of viewership — while Netflix NFLX, -0.46% used to consider any customer that streamed 70% or more of a single episode or film as having viewed that property, it now will count a view after viewing two minutes or any offering. The company admitted that it would boost the limited viewership numbers it provides by more than one third.
“The new metric is about 35% higher on average than the prior metric,” Netflix executives said in their quarterly letter to shareholders. “For example, 45m member households chose to watch ‘Our Planet’ under the new metric vs. 33m under the prior metric.”
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Netflix did not immediately respond to a request for clarification on if a single two-minute viewing of a single episode would lead to counting that viewing in its accounting of the entire series. The definition, stated in a footnote in Netflix’s letter, states “Chose to watch and did watch for at least 2 minutes — long enough to indicate the choice was intentional — is the precise definition.”
For instance, Netflix said in its letter that “The Witcher,” a television series that made its debut in the fourth quarter, was its “biggest series one TV series ever,” and that “76 million member households chose to watch this action-packed fantasy.” Given the definition, it would seem that anyone who watched the first scene of that series — which lasts roughly two minutes and 15 seconds — would be counted in that metric. A viewer likewise could watch the first scene of Netflix original movie “6 Underground,” which premiered in the fourth quarter, and cut it off before the opening credits but still be counted among the 83 million households whom Netflix said watched that film in the first four weeks of release.
Streaming platforms have largely avoided providing viewership data in the same manner as linear television, which uses the numbers to attract advertisers. Traditional media companies regularly release ratings information, and companies such as Nielsen Holdings PLC NLSN, -1.35% offer ratings on a wider scale. The information helps advertisers select programming to place ads, which Netflix has long pointed out does not affect its commercial-free streaming service.
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Netflix long avoided offering viewership metrics, but began offering limited results in quarterly earnings announcements last year. Chief Content Officer Ted Sarandos said last April that he expected to expand the numbers Netflix provides moving forward.
“Over the next several months, we’re going to be rolling out more specific granular reporting — first to our producers, and then to our members and of course to the press over time — and be more fully transparent about what people are watching on Netflix around the world,” Sarandos said.
In its letter Tuesday, Netflix said that its new definition is closer to what competitors such as Alphabet Inc.’s GOOGL, +0.18% GOOG, +0.27% YouTube uses to define a view of its content.
“Our new methodology is similar to the BBC iPlayer in their rankings based on “requests” for the title, “most popular” articles on the New York Times NYT, -0.56% which include those who opened the articles, and YouTube view counts. This way, short and long titles are treated equally, leveling the playing field for all types of our content including interactive content, which has no fixed length,” executives said in their letter.
Netflix stock bounced around in after-hours trading following Thursday’s report, and was most recently up 2% in the extended session. Shares have declined 0.3% in the past year, as the S&P 500 index SPX, -0.27% has gained 24.7%.
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