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Netflix Numbers Are Worthless Without Context — and That’s Unlikely To Change

Those sexy viewership numbers in Netflix quarterly reports are meaningless without verification— and why would Netflix want to do that?

Netflix The exterior of Netflix headquarters is seen in Los Gatos, Calif. Netflix subscribers watched more than 1 billion hours of online video last month, a significant milestone that reflects changes in people's viewing habits in the era of mobile devices. It comes as the company tries to wean customers off a DVD service that is more expensive to operateNetflix-online Video, Los Gatos, USA

Netflix Headquarters

Paul Sakuma/AP/REX/Shutterstock

Here’s a strange thought from someone whose job is analyzing movie box office: As a journalist, I want Netflix data. As someone who has followed box office across his entire career, I’m not sure that it would be as meaningful as box-office data. And, it appears that doing so could be harmful to Netflix’s interests.

For Netflix, data means specific viewership totals for their programming as well as box-office performance — two very different issues. So here are the choices and the risks for Netflix.

  •  The prime gauge of Netflix’s success is its number of paid subscribers. They provide these numbers regularly. (No choice, as a publicly traded company; these figures help investors to determine investment).
  • Unlike HBO and similar, Netflix can track every time a subscriber watches a program, and how much is viewed. According to Netflix, a viewing is when a member account watches at least 70 percent of one episode of a series, or 70 percent of a film — but that’s vastly different from the much cleaner box-office metrics of buy ticket/report sale. Also, it isn’t transactional; subscribers pay for the service, not for the individual program.

So, Netflix has started to reveal numbers, with no independent verification. In its quarterly report, it 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. Since they didn’t specify territories, the numbers are likely worldwide, with no breakdown for domestic.

Although their exact provenance is uncertain, those numbers are huge; according to Nielsen, 17.4 million people watched this week’s premiere of “Game of Thrones.” And this is a time when Netflix could stand to do some chest beating with Disney+ revving up, questions of Oscar eligibility are pending, and the streamer is facing the theatrical questions that will surround Martin Scorsese’s “The Irishman.” If those 52 million viewers translated to movie tickets (which is unlikely), that would account for a global box office well over $300 million.

TRIPLE FRONTIER cast (2019) - pictured L-R: Garrett Hedlund ("Ben"), Oscar Isaac ("Pope"), Ben Affleck ("Redfly"), Charlie Hunnam ("Ironhead"), and Pedro Pascal ("Catfish")Photo by Melinda Sue Gordon / Courtesy of NetflixTF_DAY31-0124.RAF

“Triple Frontier”

Melinda Sue Gordon/Netflix

So, what if an independent agency — like Nielsen, which started tracking entertainment with radio in 1936 — could verify those claims. What would that provide?

With TV, Nielsen provides key viewership and demographic data that sets ad rates and helps determine show renewals and cancelations. Rentrak tracks box-office, with theaters making daily reports of ticket sales. However, that only became standard practice in the early 1980s; prior to that, box office results were reported as annual estimates of film rentals — that is, the portion of ticket sales returned to studios.

For post-theatrical performance, the reporting is crude. Charts rank DVD/Blu-Ray sales, and iTunes ranks weekly viewing, but there’s no specific numbers. (This is a significant knowledge gap: Studios recoup a higher percentage here than they do from theaters, and home viewership is often much larger than theatrical.)

However, since Netflix is ad free and makes its money entirely off subscriptions, none of those measurements have real impact on its bottom line. However, sharing numbers could certainly create some problems, as it’s vital internal information that benefits Netflix. If it’s made public, it also benefits rivals that can use it to help guide their own decisions. By keeping it to themselves, Netflix gains an advantage.

It’s hardly a unique strategy: If McDonald’s introduces a new menu item, the public can tell it’s a success if it stays on the menu. The company doesn’t reveal exactly how many burgers were sold in each territory, or compare it to the sales of french fries. It’s competitive data.

That information also carries power for the people Netflix hires for its projects. It’s totally fair that they should have a sense of their financial worth — but any business prefers that their contractor deals remain discrete from internal calculations of value. And here, it would be very difficult to calculate profit participation when any program — no matter how successful — is only one of thousands that are available in a subscription. Regardless, those details could make Netflix’s negotiating position weaker.

"Roma"

“Roma”

As for the industry’s call for Netflix to report box-office performance, there’s no compelling argument beyond normal industry practice, and its competitors’ desire to see that it’s vested in the exhibition industry (which is debatable).

There might have been reasons to hold back on “Roma.” Its gross, which we estimated around $4 million, was great for a black-and-white subtitled film. For a leading Oscar contender, or an Alfonso Cuaron film, not so much. The same people (in some cases, competitors) who criticized the lack of reporting would have immediately found it wanting — despite the fact that most of its dates came while it also screened on Netflix.

All that said: If Netflix starts providing numbers for on-site performance, it’s hard to see how it would explain continuing to not doing the same with box office, where it is already the norm.

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