Streaming leader Netflix, Inc. (NASDAQ:NFLX) has kept the viewership numbers of its most popular shows extremely close to the vest. The company isn't obliged by relationships with advertisers, so much of the information remains a closely guarded secret, much to the dismay of linear television executives.
Television ratings guru Nielsen is one of many companies that have for years attempted to shine a light into the darkness of Netflix's programming secrets, though the effectiveness of its methods have been disputed by Netflix.
Nielsen is back with its latest estimate on the popularity of a Netflix show, saying that Lost in Space is the company's second-biggest series premiere in the last year, behind only the second season of Stranger Things.
An outsider's view
At an industry event in New York City, Nielsen said an estimated 6.3 million people watched the debut of Lost in Space within three days of its launch. An even more impressive statistic cited by the company was that 1.2 million -- or 19% -- of that audience watched the final episode with three days, reflecting the growing tendency toward "bingeing," or watching multiple episodes of a show in one sitting.
To put those figures into perspective, Nielsen said that 15.8 million viewers watched the premiere of Stranger Things season two, and 11 million viewers in the U.S. streamed Netflix original movie Bright.
Nielsen also claimed that 10% of all time spent on television is spent on streaming services like Netflix, and that number climbs to nearly 25% among younger viewers between the ages of 12 and 17.
In what is likely the best news for Netflix, a full 49% of streaming happens on Netflix, followed by Alphabet's YouTube with 10%, Hulu with 8%, and Amazon Prime with 6%.
Not even close, says Netflix
It's important to note that in the past, Netflix has vehemently disputed the accuracy of Nielsen's findings, saying, "The data that Nielsen is reporting is not accurate, not even close, and does not reflect the viewing of these shows on Netflix." The company even poked fun using the very show Nielsen was attempting to measure.
Late last year, Nielsen said that an estimated 15.8 million viewers watched the premier of Stranger Things 2 within the first three days, with 11 million of those viewers from the 18-year-old to 49-year-old demographic coveted by advertisers. Netflix shot back, saying, "Their math might be from the Upside Down," alluding to the alternate dimension that plays such a prominent role in Stranger Things. The company went on to say that Nielsen only captures a fraction of the total viewers, failing to measure significant audiences like mobile and international.
Netflix may be right about Nielsen's method, which uses snippets of audio from programs using set-top boxes in an attempt to determine viewer numbers. This method fails to include laptops or tablets, and Netflix has previously revealed that mobile devices may account for as much as 30% of its streaming audience.
It's all about subscriber growth
More than half of video streaming subscribers indicated that they signed up with a service like Netflix for the original content, according to the 12th edition of Deloitte's Digital Media Trends Survey. The report also found that 49% said they valued the quality of the content offered. This confirms the results of a similar survey last year, which found that original and exclusive programming is the most important factor for consumers when deciding to subscribe to an over-the-top video service, according to the Magid Media Futures study.
This strategy has been embraced by Netflix, and it appears to be working. The company recently reported global net subscriber additions of 7.41 million, a record for the first quarter and an increase of 50% year over year. The numbers, which eclipsed the company's forecast of 6.35 million, were driven primarily by the "growing breadth of content." Subscriber additions also drove year-over-year revenue growth of 43%, "the fastest pace in the history of our streaming business," according to Netflix.
Based on Netflix's previous responses, Lost in Space likely had a much larger audience than indicated by Nielsen and may well be the company's biggest hit since the second season of Stranger Things.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Amazon, and Netflix. The Motley Fool owns shares of and recommends Alphabet (A and C shares), Amazon, and Netflix. The Motley Fool has a disclosure policy.