A TV show is any content that is produced and telecasted for viewing on a television set or broadcast via over-the-air, satellite, etc. Producers invest money to create a TV show and make a profit from it. So, how do TV shows make money, or what are the income sources of TV shows?
There are many ways TV shows make money. Their main source of income is the advertisements shown during the telecast of serials. Based on the popularity of the serial, the producer or Television Company can increase or decrease the advertisement cost. TV shows also earn from subscription fees, investors, merchandise, DVD sales, and many more.
10 Ways TV Shows Make Money
1. Broadcasters And Commercials
This is one of the main sources of income for TV shows. Usually, the TV shows producers gain money by pitching a TV show to a particular network. Usually, the pitch contains the plot of the show and some of the actors who worked on the show, and the budget for the show. Then the TV network examines the plot and actress and decides if the show can bring in a lot of viewers. If the TV channel believes that the show will bring lots of viewers then the network purchases the rights to air the TV show. Then the producer receives the money to make the show, and the filming process begins. The TV channel or the investor receives their money back through commercials. If a TV show is for 1-hour then one-third or 20 minutes of that airtime belongs to commercials.
2. Subscription Services
Nowadays, subscription service has also become a great source of income for TV shows. Not every entertainment network uses ads to generate revenue. For example, streaming services and cable services use different methods. Streaming service like Netflix has a subscription model and it is their main source of income. Netflix charges fixed monthly fees for its streaming service. Their 80% revenue comes from these monthly fees. Then Netflix uses the money to create original series and movies that can attract more subscribers. So TV shows use the Netflix platform and earn money by pitching to Netflix. Cable services like HBO and Starz make money similarly. You will have to pay some extra fees to watch HBO and Starz in addition to your normal TV plan.
There are many investors available who invest in TV shows. Therefore, producers approach media moguls for funding when they want to make TV shows. The approach to investors is quite similar to pitching to a TV network; here producer pitches the idea of the show to the investor. The producer discusses everything about the budget, plot, cast, crew, and other important details that might convince the investor to invest in the show. If an investor invests money in a show then he/she won’t receive money back through commercials like the TV channels. Here, the investor might receive credit on the TV show and a certain number of royalties that the show generates through the network.
This is a new way TV shows make money nowadays. Here, producers/TV shows receive money on small donations from a large populace. This method is very popular among independent TV shows to receive a budget. Some of the most popular places where TV shows receive crowdfunding are:
Usually, the producer shares the plot of their TV show on these platforms/websites. Producers also share the information of the actors or actresses who have signed on for the show. Many producers also include the concept art, storyboards, or even glimpses of the script to attract investors. Another advantage of crowdfunding is, it creates hype among the people about the show. It’s like free marketing.
This is also a new way for TV shows to make money but over the years it has been producing a significant amount of revenue for popular films, TV shows, etc. Like brands, now TV shows are also making money from merchandise selling. For example, T-shirts are a great way for TV shows to earn money. It requires fewer budgets to make T-shirts and fans also love wearing apparel that showcases their love for a particular show. Merchandise doesn’t have to be restricted to apparel only; there are huge demands for Collector’s items among fans so producers use the demand to make money. TV show makers produce an expensive and limited edition of certain TV show props, character statues, and other novelties that help TV shows generate a significant amount of money.
6. Ads And Subscription Payments
Many TV networks use both ads and subscription payments to pay for TV shows. One prime example of this type of network is Hulu. Initially, Hulu had a free and premium version without ads but now things have changed and now Hulu has monthly subscription fees. Along with the subscription fees, users also see short ads during their TV shows. The duration of these ads is short compared to standard TV networks. Usually, TV networks have 20 minutes of ads whereas Hulu only has 10 minutes of ads for an hour-long show. Then, Hulu use the revenue to produce its own TV shows. Finally, the TV shows get money from a share of Hulu’s budget through subscription plans.
7. Bidding Between Networks
If the producer can create hype about their TV shows among the viewers’ then they can get a lot of viewers talking about the desire to watch it. This is something that can attract TV channels and allows the producers to approach several different TV networks with the show. So, each TV network will bid against one another for the rights to air the show. This is a very effective way to make lots of money for TV shows. Here, the highest bid earns the right to air the show on their TV channel. So, a bigger bidding war can earn the TV show lots of money.
8. DVD Sales
Though it might seem like a backdated idea because DVDs are slowly declining in use but still they are a great way for TV shows to generate money. Before the era of streaming services, DVDs were one of the main methods TV shows could earn money. People and fans bought DVDs of their favorite shows to watch in their homes. DVDs allow the fans to watch their favorite TV shows over and over again and this facility of DVD drove sales. Though the number is very small, still today, some fans buy DVDs of their TV shows.
Many TV show producers seek out certain corporations for sponsorships and it is also a great source of income for TV shows. If the TV show can create great hype then various companies or corporations seek out the producer instead to offer sponsorship. Sponsorship is quite similar to investment except that sponsorships are only available in the show’s world. For example, if a TV show receives sponsorship from Coca Cola then the writers might have to include a line somewhere in the script praising a Coca-Cola product or the product might have to be present in the scene. Or, you might see the ads of Coca-Cola during the intervals. Usually, a TV show can take on a few sponsors because many companies compete with one another.
Many of you might not have any idea about the syndication of TV shows and how they make money from syndications. Syndication is an agreement between the producer or studio and the TV network. Here, the network will offer a certain amount of money to the producer or studio for the right to continuously air episodes from the show. According to this type of deal, the TV show continues to generate profit whenever the viewers watch it with ads. It’s like royalty income for the TV shows because they will continue to generate money even if they’re done producing new episodes. Some examples of syndicated shows are:
5. I Love Lucy
Finally, TV shows make money in various ways but their main source of income is ads. The more a TV show can create hype among the viewers the more they can generate revenue from the ads and other sources. On the other hand, syndication is the best way for TV shows to generate long-lasting revenues. So these are the common ways your favorite TV shows are making money.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.