How Do We Measure an Audience?

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Live and nlocation. Recording hi welcome to filmmakeriqcom. I m john nhess and we ll set out on the task of answering the question. How do you measure nan audience the most obvious way to measure an audience nis to count up all the tickets that were sold at the box office.

Now for a stage. Play this nis not exactly rocket science. You just add up the receipts of that night s showing. But for a major motion picture.

Release that nis playing in 4000 screens around the country or even around the world this can get a nlittle bit more tricky. The basics are still the same each movie theater would count nup. The receipts and report to the distributor that day s take now since the movie viewer nis the end of the sales line once. He or she bought the ticket.

We talk about the audience nin terms of dollars rather than tickets sold now with real time tracking systems installed nin. Most theaters. A distributor takes this gross revenue data from all the movie theaters nand. Adds.

Them up to see how much a movie makes over say opening weekend. But wait a minute you always hear about nwhich movie. Won the weekend at the box office on sunday morning before the weekend is neven over where do those numbers come from actually those are estimates. Each studio nhas a particular formula for estimating the weekend haul based on historical data.

Comparing nthe movie. That s in theater. Right now to a similar one that was released a similar time nof year with a similar advertising budget. If we know friday and saturday s take we can nmake a fairly accurate estimate of what sunday s take will be then on monday afternoon the actuals numbers nare totaled and printed in trade journals.

So why go through the trouble one reason nwas to account for some of the movie theaters. That didn t have real time tracking previously nonly 90 of american and canadian theaters were tracked by rentrak and nielsen edi. But nin 2009. Rentrak buys up nielson edi.

Becoming the sole provider of real time. Or at least nnear real time box office receipts and now boasts coverage of 99 of all theaters in nthe. Us. And canada these results are purchased by the studios nand.

Yet they re still releasing box office. Predictions before the weekend is over why nwell the answer may be buzz having the figures for the weekend box office gives monday morning nnews programs. Something to talk about which in term makes it into water cooler conversations nand you just generated some free word of mouth advertising for the film. But while we re on the subject of box office nlet s try to figure out what some of these industry.

Terms. Mean now. This is a topic that ncan get extreme dense and we will probably do a video on budgetary numbers. At some point nbut.

I want to give you just a taste so when you see these numbers. There s at least a little ncontext and because there s a lot of money at stake..

Take. These percentages and averages nwith a grain of salt because there s a lot of creative accounting going on when the numbers are announced they are gross nnumbers that is the total amount of revenue generated before any expenses are subtracted the first in line to get a cut of the gross nis. The exhibitor. The movie theater itself historically in negotiating with a distribution ncompany a theater would determine it s base costs of running the theater called the nut nthen a sliding scale was negotiated so that the distributor gets the majority share on nopening weekend.

Upwards of 90 of the gross falling 10 every weekend. This created an nincentive for the studios to drive audiences to see a film on opening weekend. While incentivising nexhibitors to hold movies in theaters as long as possible as they would make a bigger chunk nof. The ticket price on older movies.

But with the shortening of the release window nand competition between video on demand and streaming recently exhibitors have moved nmore toward a split based on national box office. Results with a straight up split nbetween. 48. And 63 of the box office.

The better the sales the more the distributor ntakes. The result is movies go in and out of theaters. Quicker and pay off faster. 80 nof.

The box office revenue for a film is generated in the first 2 weeks of release. Because theaters are only making half on the nmovie ticket price. The real money in the theater business comes from the rather large nmarkup on concession stand items popcorn and soda cost mere pennies to make. But the ntheater gets to keep 100 of the profit.

So when you look at how much money a movie ngrosses. The first thing you have to do is cut that in half that s how much the distributor ngets but wait we re not close to net profit yet. According to baseline intelligence. A research nfirm for the entertainment industry.

The six major studios spent an average of 37 million ndollars per picture for print and advertising in the year 2009. Now. That s only average n. The major tentpole films can spend upwards of 85 million dollars.

The print side the p of the industry. Abbreviation np. A covers the cost of creating actual film prints for distribution 35mm film prints ncan range from. 1000 to 3000.

A piece depending on length of the film and quality of the print nfor a wide distribution of say 4000. Theaters that can really add up fast even with quantity ndiscounts that the studio can muster. Which is why to the chagrin of quentin tarantino nand christopher nolan studios are pushing so hard for digital projection. According nto.

The mpaa traditional projects made up 81 of the us market in. 2009. But four years nlater in 2013. That number is down to just 75 .

The fast move to digital almost mirrors nthat of sound conversion in speed. Although digital s drive was cost savings and sound nwas. A new dimension in storytelling. Still the print.

Only makes up about 10 of nthe p. A most of the rest of the money is spent on advertising and this is where it ncan get really complicated if not even a little try to create near a instant brand awareness nof. A film in just a matter of a couple weeks. And the only way to do this is with a well ncrafted advertising strategy involving television social media.

And even bill board advertising nhow that money is spent is where studios can inflate costs for one many studios are part nof. Larger media conglomerates..

Paramount is a subsidiary of viacom. Which owns cbs and na host of cable channels. So buying air time for a paramount movie from cbs is almost money nshell game with really no limit on the price creative accounting aside. According to larry ngerbrandt.

Who wrote in the hollywood reporter accounting that an average of 55 of domestic nsales go into the exhibitor s pockets. The average 2009 movie release again average nhad to do gross 186 million dollars in the domestic box office in order to recoup the nproduction and p. A costs. And that s not counting the percentages taken up by deals struck by nproducers stars and production companies now remember these are all averages.

But 186 nmillion domestically is not something that the vast majority of movies are able to accomplish. But don t shed a tear for the studios just nyet. There are several other windows for studios to earn money first through international nbox office receipts. Which can sometimes dwarf domestic then through dvd bluray streaming nvideo on demand merchandising and of course licensing for television.

I find it rather ironic that when television nfirst hit the entertainment scene back in the 1950s. The movie studios hunkered down nto do battle against this device that kept people at home away from the theater and nthen. Only a few years later tv became savior of the movie business as a way to generate neven more revenue tv signals are broadcast through the air from na broadcasting tower. Anyone with an antennae and now a digital decoder can pick up the nsignal and watch.

So how do we determine how big a tv audience is well that question plagued. Arthur c. Nielsen. Nin.

1923. Nielsen. Started his company ac. Nielsen.

With the purpose of selling engineering performance nsurveys soon his company was in the business of creating market research reports in 1932. Nnielsen began to track food and drug transactions. Giving brands. A way of determining their share nof.

The whole market. The term market share your piece of the industry. Was coined. Nat.

The nielsen company in 1942. After the purchase of audimeter nielsen nbegins to track the popularity of radio station programs using a sample of. 1000 homes in n1950 nielsen begins this service with audiencestelevision now a question you might have initially is nhow can a sample size of only 1000. Or so homes generate an accurate report of a population nof say 10 million tv sets.

Well. The answer to that is statistics. Obviously the larger nyour sample size the more accurate your results will be if we poll. The entire population nwe will get a perfect breakdown in theory.

But polling. An entire population isn t plausible nfor cost and time reasons. So we have to take a sample without getting too deep in the nmath. If your sample is truly random and free from bias.

Then you can calculate the margin nof error. And it turns out you really don t need that big a sample to get the margin of nerror down to about 1 2. But that is if your sample is truly random nand that s not necessarily easy task o accomplish so to track television viewing habits nielsen nrelied on two methods of reporting. The first were diaries.

These were paper logs of what nyou watched and how long you watched over a period of a week. But as you can imagine ndiaries are prone to error people forgetting to input data or even downright cheating and nfalsely reporting their viewing habits..

The second method nielsen used were set meters. Nthese were devices installed on the tvs of nielsen families. That recorded the use of nthe television. And would telephone home base with the results every night set meters could nrecord minute by minute data to track the viewing habits of a household.

Without error nbut the meter. Didn t know who if anyone was watching only that the tv was on in the n1980s nielson added. People meters which could now track the viewing habits of different nindividuals in a household in the 1990s. The portable people meter came out which listens nfor radio television and cable audio to report back the latest generation uses wireless ncell phone signal unfortunately in a terrible missed opportunity they made them black.

So nwe will never get the pleasure of saying one eyed one horn portable purple people meter. When you see nielsen ratings for a national nshow. They are broken down into three figures. Rating.

Point share and viewers watching nin. 2013 there were an estimated 1156. Million television. Households in the united states n called the universe a national rating point is one percent of that or 116.

Million nhouseholds to determine the rating point. We divide the number of viewers called impressions nby. The universe in other words. A rating point is the average percentage of people nwatching of all possible tvs.

The second part is the share that is the percentage of televisions. Nthat were in use use during the time. We re trying to measure the share will always be nhigher than the rating viewers. Watching is an estimate based on how many people are watching nper household.

This can vary from program to program. Imagine. The difference of viewers nper household of the latest guilty pleasure reality show versus an event light sports ngame like the superbowl here s a real world example. Lets saw we have na show that s airing at 8pm on.

Cbs it s national rating is 28 with a 9 share with an estimated n1064 million viewers that means 28. Of all televisions are tuned that program. Which nrepresents. 9 of all televisions turned on at that hour.

Now let s compare that same nchannel at say. 10pm which has a rating of. 34 and a 10. Share but only an estimated 929.

Nmillion viewers the number of viewers is down. But the share is higher. Because perhaps nmore people turned off the tv and went to bed of those that are still watching tv. Now n10 are tuned in up from 9 at 8pml.

But this only applies to viewers watching nlive. What about time shifting watching on a dvr well for this. Nielsen. Adds.

Three more nstreams of data. There s live live. Same day. And live 7 days services like tivo nhave deals with nielsen to provide this data to be included in their measurements.

So now. What are sweeps the term dates back nto 1954 well remember the paper diaries nielsen..

Just didn t have the manpower to log nall. The paper diaries across the nation. At the same time currently they send roughly n2 million of them in 210 television. Markets.

So. What they did was to sample viewing habits nfor one week four times a year but stagger their sampling by territory starting with nthe east coast and the sweeping west over a period of 4 weeks. So sweeps is really na national 4. Week affair that occurs in february.

May july. And november. Well if these were nthe months being sampled. Broadcasters.

Quickly realized that it was to their benefit to get nthe highest ratings in these few months. Before the diaries had to be turned in now why go to all the trouble to measure the nsize of a tv audience. The answer is money advertising rates the higher the rating nthe more money the network can ask for advertising on a particular show each 30 minute block nof television contains 8 minutes of commercials. 6 of those minutes are dedicated to national nadvertisers.

Their price is locked in with the national ratings and share metrics. The nremaining 2 minutes are dedicated to local market advertising and those rates are determined nduring sweeps week. Now as i have grown accustomed to saying. Nthis is just the tip of the iceberg when it comes to television metrics.

There s data non commercial viewership and ratings can be broken down along geographic and demographic nlines. But the tv landscape is changing and changing nfast as more and more media is now being consumed through the internet computers are quite simply amazing things nfor communications. All those problems we had with counting tickets at the box office. Nor logging paper diaries at nielsen.

Are completely avoided with computers who can tireless sit nand count views 24 7. Online video on demand services like netflix hulu and amazon can ntrack your profile and know exactly what you watch how long you watch it and when you nwatch the ads you click on et cetera et cetera the information age isn t just about information nbeing at your fingertips its about using the information. We gather about the you and nwhat. We do with it.

But since you are paying for those legal streaming sites. There s not nreally a lot of incentive on your part to inflate your viewcount. But that s different when it comes to a monetized nplatform like youtube youtube s parent company google has been in a battle with black hat nseo and spammers for a long time google wants to make a better experience for the web user n. While selling advertising to you while the black hat seo and spammers want to generate nas many click throughs for quick financial gain on youtube views are like currency and they nreally become currency through ad dollars so inflated view counts mean wasted advertising.

Ndollars and unhappy advertisers generally tight lipped about what exactly constitutes na view. Youtube has gone on record as defining a view as a video request generated by an nactual viewer who got what they wanted and had a good user experience so videos that nare set to autoplay on a website will not count. Because no user actively requested it now things get a little more complicated nwhen you upload a video to youtube copies of it are cached in servers. All around the nworld that way a person in say india who requests your video can contact the local ngoogle server rather than having to call up a server that s half way around the globe.

Now much like the box office. We talked about nearlier periodically each local google server will call up tje central view count server nand report in how many people watched the video the central view count server adds nup all the views and displays it on the site that is until it hits 300 currently there are 100 hours of video being nuploaded to youtube every minute and that number keeps going up now honestly the vast nmajority of those videos will not do more than 100 views or so even if monetization nis enabled these channels won t make a penny through advertising. So you don t really have nto use precise view counting on those videos. But once the view count hits 300 youtube nbegins to take notice and applies a stricter algorithm to verify that indeed those views nare coming from legitimate sources that they are user requested and not tricked into nclicking on it and that s why you will often see a video hit 301 and sit there for a few nhours while the server goes back and verifies.

The views views are still being counted during nthis process. But not shown publicly eventually the server catches up and the views are accounted nusing this strictly counting algorithm from box office to television metrics and nfinally internet tracking data. We ve just touched on the science of measuring audience npeople develop full careers just on this stuff. Alone.

And these statistics have the power nto move millions of dollars in determining what gets greenlit and what doesn t that s nthe power of the audience now that the tools of media creation are getting better and cheaper nhaving. An audience is becoming more crucial. But in the end they still just want to watch nand experience. Something great i m john hess.

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“Please consider supporting us on Patreon: the full Filmmaker IQ course on how we measure audiences with sauce and bonus material at: success of a film or video is often judged on the size of the audience but how do we measure that audience? It s not always as simple as counting tickets. In this course we look at the techniques and methods studios and distributors use to calculate who has seen their products and try to make sense of all those Box Office Numbers and TV Ratings.nnIf you have any further questions be sure to check out our questions page on Filmmaker IQ:n”,

Film (Media Genre), Television (Invention), Metrics, Statistics (Field Of Study), Entertainment (TV Genre), Filmmaking, FilmmakerIQ, John P. Hess, Nielsen Me…

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