It's like if say Family A watched channel 1 at 8 on a Friday, Family B watched channel 2 at same time, and Family C watched channel 3, yet all three families taped the same show that was showing the same time on channel 4. The channel 4 show would be physically watched by three times as many people, but wouldn't even show up on the Nielsons.
But I'm sure the money-making machine weighs up the revenue from downloads, selling to other networks, and DVD sales against lost advertising revenue. These secret calculations are the ones that decide if a show lives or dies.
Nope. The people who tape a show and watch it, or watch it anywhere else don't matter one little bit. You see, a network executive (as well as companies buying commercial time) don't give a single wit about how many people watch the show. What matters, is how many people watch the COMMERCIALS. The more people watch the commercials, the more money you can ask a company to pay for a commercial during that time slot, the more money you make. Not enough people watch the commercials, the money you can ask is too low to make a profit, and the show wasn't a good enough advertiser for the commercials, and it gets canceled. That, after all, is what TV shows are: nothing but interesting trailers for the commercials so people watch those. In a taped show you zip past commercials, on DVDs there are none. There is no revenue for a network or tv channel in taped shows and DVDs, so they're not counted.