The WSJ reported last night that next month Nielsen will begin measuring viewership of programs on Netflix and Amazon. This would represent the first time that any sort of granular viewing data by program would be available, offering potentially huge benefits to the ecosystem. According to the WSJ, Nielsen will use its people meters to analyze the audio components of programs. A key caveat is that mobile viewing would not yet be measured.

Both Netflix and Amazon have been opaque to date about the success of their original series, while never discussing viewership of licensed programs. That has the left the market eager for any scraps of viewing information they will divulge, along with analysts' estimates. For example, in May, Netflix said it streamed 6.5 billion hours of video globally in Q1 '14. The Diffusion Group recently released a report estimating Netflix streamed 7 billion hours in Q2 '14, with 72% occurring in the U.S. That would translate to about 93 minutes per day per average subscriber.

Assuming that estimate is in the ballpark, the over-arching question is what are subscribers actually watching during these sessions?

The answer has become increasingly important to ad-supported broadcast and cable TV networks which have seen C3 ratings plummet in Q3, with high-profile Wall St. analysts now saying SVOD viewing is to blame. To the extent that licensing their own programs to SVOD services helps these SVOD services become more appealing to their subscribers, thus pulling viewers away from TV viewing, this dynamic is troubling for the networks.

The new Nielsen data would certainly shed new light on this debate, potentially reinforcing analysts' assertions, or refuting them. At a minimum it would help networks understand SVOD vs. advertising business models tradeoffs better.

The Nielsen data would also affect negotiations between SVOD services and content providers. Netflix in particular, with its heavy reliance on subscriber data to inform its content acquisition decisions, has enjoyed a long-standing advantage in negotiations. Nielsen data would help level the playing field, enabling networks to more accurately understand the value of their content to SVOD and bargain accordingly.

Networks could also use SVOD performance to inform their own programming decisions. For example, syndication revenue has always been an important consideration for network executives. Certain types of programs (e.g. "police procedurals" like "Law & Order," "CSI" and "NCIS") have performed well in traditional syndication.

But ad-free SVOD, with its conduciveness to binge-viewing, has, at least anecdotally, proven successful with serialized dramas (e.g. "Breaking Bad," "Mad Men," etc.). With actual data, networks may be influenced to invest more in this format - right down to fine-tuning specific program attributes like including a strong female lead or emphasizing romantic plot lines, etc. Note that Netflix has strongly relied on data to drive its own originals agenda.  

With Netflix now in 37 million U.S. homes and growing (plus millions more for Amazon), SVOD is now clearly an entrenched part of the video landscape and too important to ignore from a ratings standpoint. While the upcoming Nielsen data won't be comprehensive or perfect, it will be an important initial window into SVOD viewing behavior that the market has been eagerly awaiting.

(Note: to learn more about Nielsen's SVOD ratings plans, join us at VideoSchmooze on Dec. 4th, where Nielsen's SVP, Client Insights Dounia Turrill, will be speaking on the opening session. Register now to save!)