Although different regions can use various methods, the traditional way to monitor television viewing habits has been a rating system. In many countries, including the US, the Nielsen Company uses in-house devices that track the viewing habits of thousands of people. These numbers represent what average people of a certain age and gender watch, which then indicates the number of viewers who probably watch a particular show. Networks use this information to gauge how popular certain shows are, which determines how much they charge companies to advertise during those programs.
The Nielsen Company
The Nielsen Company tracks what shows viewers watch on television networks through a representative sampling of about 25,000 households that let the company record what programs they watch. This is a fairly small sampling, considering US households with televisions for the 2010-2011 viewing season was estimated at almost 116 million, but they choose people based on their ability to represent varied populations. For example, Nielsen might choose a household with adults and children of multiple genders and age groups to better represent more viewers.
How the Information Is Gathered
Every time someone in a Nielsen household turns on a television, he or she indicates which person it is and the box tracks how long the person watches a show. Each member of a household has his or her viewing habits recorded individually, through indicating who is watching the television at any given time. If multiple people, including guests, view a program, each one enters information about his or her age and gender into the box so that the viewing habits of each person can be tracked. This viewer-specific data sets the information Nielsen records apart from data gathered by a regular cable television box.
Nielsen turns this sample of viewers into a percentage representing total viewership. If 2,500 people in Nielsen households watch Example News Show in a week, for example, then they conclude that 10% of television viewers in all households watched the show. This would indicate a rating of 10 points, and networks rank their shows based on the number of viewers they have each week.
Demographics and Commercial Ratings
More important than just the ratings of a show are certain demographics and "commercial ratings" for a program. Since the Nielsen box tracks viewing habits by age and gender, companies can specifically target certain groups, such as people between the ages of 18-49. This age range tends to buy more products than other ages, so it has become the most important demographic to many advertisers. Networks can charge more money to advertisers placing commercials in a show with high numbers of viewers in this demographic, even if the show's overall ratings are lower than another program more popular among older or younger audiences.
The Nielsen Company has also established a secondary rating called "commercial rating," which is based on viewing habits of commercials. Ratings have value to networks because they use these numbers to sell time to advertisers. Commercial ratings indicate whether people are actually watching commercials, or simply skipping them through recorded programs or channel-changing. Many advertisers care more about commercial ratings than general ratings or market shares, since viewers who skip their commercials are not as valuable to them as those who watch the ads.
Many TV viewers have heard the term "sweeps" related to ratings. During the months of November, February, May, and July, Nielsen sends viewing diaries to millions of households. People keep a manual record of what shows they watch and then send this information back to the company. Networks often run especially exciting programming to attract more viewers during these months, which boosts their numbers in the collected diaries.
Time-Shifted Viewing and Internet Television
One major issue that has arisen for ratings systems is the increased popularity of Digital Video Recorders (DVRs) that let people record shows and watch them later, called "time-shifted viewing." The Nielsen ratings do take these viewers into consideration, but they cannot track exactly what shows are watched at what time, only that viewers recorded them and likely watched them within about three days. Since many people skip commercials during playback on DVRs, many advertisers do not care much about these numbers.
The increased availability of shows on the Internet has offered new possibilities for tracking viewing habits. Television networks can easily see how many people pay for and download a show through various websites, and many of them offer shows for free with limited advertising. The number of downloads can be recorded by television networks and might influence decisions about keeping certain programs airing. Many advertisers do not consider such viewing as valuable as regular TV watching, however, which has made Internet streams for shows less financially important than traditional broadcasting.