New media upends TV ratings system

By Basil Katz

NEW YORK (Reuters) - The explosion of ways people watch television is confounding the media industry, which has relied for decades on the Nielsen ratings but now must adapt to the realities of the Internet and on-demand video.

Americans are watching more TV than ever -- an average of 151 hours a month -- on more networks and in increasingly diverse ways. Industry heavyweights and analysts are calling for a new ratings system to keep up.

At first there was a "crisis in measurement" due to the scarcity of data, said Alan Wurtzel, president of research and media development at NBC Universal, which is 80-percent owned by General Electric Co.

But now, he said, content providers are "drowning in data."

Broadcasters, content providers and advertisers including consumer products giants Unilever and Procter & Gamble Co are all trying to adapt.

"In the past one-and-a-half years there has been a geometric increase in consumers' access to the Internet for video, and the metrics market has not kept up," Wurtzel said.

Though little more than 2 percent of television viewing is done on the Internet, Hulu.com, which combines video from 150 broadcasters on a single platform, has seen its audience grow fourfold in the last year, according to The Conference Board/TNS. Hulu is a joint venture owned by media giants NBC, News Corp and The Walt Disney Co.

COALITION TO SEEK BETTER METRICS

This month 15 of the biggest broadcast network companies, advertisers and media-buying agencies formed the Coalition for Innovative Media Measurement (CIMM) to help improve audience metrics.

CIMM is a LLC composed of 15 voting members, from Unilever and Procter & Gamble to MTV Networks and the Omnicom Group Inc.

Each has contributed $100,000 for a minimum two-year engagement.

CIMM is expected to seek two bids from ratings and data companies: one to conduct set-top box research, the other for cross-platform viewing.

Thanks in part to the conversion to digital cable, many Americans are accessing their favorite shows through set-top boxes provided by cable or satellite companies.

This has led to an explosion of new audience data from half a dozen companies that mine set-top boxes for viewer habits.

Factor in TiVo and video-on-demand systems with upcoming Internet video portals OnDemand Online by Comcast Corp or Time Warner Inc's TV Everywhere -- and getting uniform data becomes that much more difficult.