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Nielsen – The quandary of the ratings powerhouse

TV Audience

Around the same time period when the introduction of colour was revolutionising our viewing habits, Nielsen ratings and audience figures grew into a key money maker for broadcasting networks around America.

11 april 2016

The name Nielsen – no relation to the Canadian comedic virtuoso – became inseparable from the small screen. It is the root of all advertising income, line-up changes, the survival/cancellation of our favourite programmes. But after 65 years the television landscape has changed dramatically. Has Nielsen?

A brief history

While Nielsen was founded in 1923 and took its first steps in market research throughout that decade, it wasn’t until 1950 that the company launched its first TV audience measurement device, derived from the audimeter, used to measure radio audiences. Twenty years later, in 1973, these ratings became national and daily. The introduction of cable, VCR and other new technologies were successfully adapted into the Nielsen ratings measurement, which were also extended to cover demographic differences such as age or ethnicity.

How do the ratings work?

A small number of households – thought to be around 26.000, although that figure has increased tenfold – participate in the programme by having a set meter installed in their homes. The choice of households is meant to be as proportionally equal as possible to the general demographics of the U.S.: race, age, employed or not, income, etc. Due to logistics, sampling has always been the preferred method (the cost of measuring every household’s viewing habits would be prohibitive).

This electronic device has all but replaced the “Viewer’s Diary” paper recording method. Manual input meters, which require household members to “check in”, are also being phased out.

Ratings in themselves are the result of a fairly simple calculation: the number of people or households watching, divided by the number of people who own a television (*100%). A 1.0 rating means that one percent of television owners (in that particular demographic) were watching the selected program. It’s a more effective tool for advertisers and networks than shares, which only takes into account people watching television at the time.

21st century TV consumption: A whole new world

Even forgetting the multiplication of illegal or illicit channels (online streaming), how different is television today? The invention of DVR around a decade ago forced Nielsen to start providing varying measurements, including different levels of recorded viewing. Then came web-based TV consumption, Hulu, smartphones/tablets and licit streaming channels. And although Nielsen allegedly tracks all these formats, their TV measurements haven’t yet included them. Subsequently, ratings have been declining for years.

Nielsen Ratings

U.S. Cable Ratings 2014. Source:


Nielsen has been introducing a new system that tracks ad viewership across formats. The Total Audience Measurement tool should solve the issues that have been irritating network executives since the start of the digital era.

Then again, with TiVo now offering its basic TV ratings for free and similar initiatives brewing elsewhere, it may not be enough for Nielsen to expand its dominance to the new age. A case of too little, too late?