Netflix and other streaming and on-demand video services have caused a large decline in broadcast and cable ratings this year. To counteract the viewing shortfall, stations may have to begin airing more commercials every hour.
Earlier this year, a report titled "Is Netflix Killing TV?" by Michael Nathanson of MoffettNathanson Research analyzed TV viewing data. The conclusion was that streaming and on-demand video services are largely responsible for the double-digit ratings slumps that have been afflicting cable and broadcast networks.
The analysis found that in Q1 of 2015, Netflix alone accounted for 43 percent of the decline in traditional broadcast and cable network viewership, and the trend is expected to continue.
"Going forward, we believe that Netflix hours streamed per sub will continue to grow," reads the report, "while TV usage will directionally continue to drop. As a result, we believe Netflix's U.S. total streaming hours relative to traditional TV will steadily rise to the low double-digit range over the next four years, representing the majority of the declines in traditional TV viewing."
Most affected by the increase in streaming and on-demand viewing were cable networks like TNT and A&E, which rely on repeats of series that can now be binge-watched; broadcast networks featuring drama series repeats; and kids' channels like Nickelodeon, whose audience has turned to content made easily available via streaming alternatives.
Now, the networks need a way to not only cut their revenue losses, but to make up for the ratings that were promised to advertisers but never delivered. The usual industry procedure has been to give those advertisers free commercial time on other broadcasts, known as "make-goods," to make up for the ratings shortfalls. The problem is that this year's ratings plunge has been so deep that the networks don't have enough inventory to cover it all, and they don't want to have to return actual cash to advertisers to even the score.
Speculation is that instead, the networks will wind up airing more commercials than ever — by packing even more commercial time into each broadcast hour, cutting the number of actual programming minutes. This could backfire in the long run, however, as more viewers get fed up with the increase in commercial advertising and continue to migrate from cable and broadcast networks to alternative viewing options such as – you guessed it – Netflix.
