A Crack in the Nielsen Armor?

Following up on previous discussions of the substantial barriers that exist to genuine competition in the business of audience measurement, comes this recent news item describing one broadcast company’s decision to ditch Nielsen’s television ratings service for an emerging competitive service that relies on set-top box data.

Does the fact that a TV station in the Wichita, KS market has switched to an emerging comeptitor mean that the monopoly that Nielsen has long held in the measurement of television audience exposure is likely to crumble? I tend to think not, because the decision by Sunflower Broadcasting is based on two factors that Nielsen can address — and that history tells us they will address — in order to maintain their market position.

First, Sunflower’s decision is based in part on pricing, and the bottom line is that is a not particualrly well-kept secret that Nielsen has maintained some eye-popping profit margins over the years, and so if lowering prices to put a squeeze on emerging competitors is something that needs to be done, it can and will be done.

Second, Sunflower switched in part because Rentrak (the competitor) is employing a set-top box methodology in Wichita, rather than relying on paper diaries, as does Nielsen in that particular market.  Nielsen has also been working on its own set-top box methodology.  And, just as was the case in the 1980s when Audits of Great Britain (AGB) entered the U.S. market with its new people meter technology, the emergence of a competitor with a more sophisiticated methodology will in all likelihood light a fire under Nielsen to move more quickly in rolling out its own version, thereby squelching any upstarts.

The bigger question that these developments raise, I think, is whether set-top boxes are indeed the future of television audience measurement.  The days of the People Meter may very well be numbered. But as long as Nielsen doesn’t remain too wedded to the People Meter (and they now seem quite willing to embrace technological alternatives), the company will most likely be able to once again beat back any emerging competitors.

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