Television shows have become a constant source of entertainment, captivating audiences around the world. Behind the scenes, however, lies a complex web of financial strategies that enable these shows to thrive. While there are various avenues of revenue generation that form the backbone of their financial success, it is crucial to deeply know – how do TV shows make money? From advertising and sponsorships to licensing and streaming platforms, understanding these revenue streams is essential to appreciate the dynamic nature of the television industry and the factors that contribute to the creation and sustainability of our favorite shows.
The Growth of the TV Industry
There was continuous growth and ownership of TV sets has started in the 1950s. However, the sales of TV sets started boosting after 1990s. As of 2022, almost every home has TV sets, and anyone, including kids, can easily operate the device as modern TVs are user-friendly and beginner friendly.
One can even watch a television program on their phone gadget with the introduction of live streaming. Many celebrities have gained fame through TV programs, OTT platforms and shows. Have you ever stopped and asked yourself how TV shows make money? Or how do they pay their employees? Well, let us explore this big question.
How do TV Shows Make Money? 11 Best Ways
One thing is clear production houses make money by selling the TV show. But here the question is, what does the TV show sells to earn money? Or, to put it simply, how do TV shows make money? We will let you know everything you need about what adds to these TV show’s earnings and what contributes to their revenue. Let’s dive in to know the best ways TV shows make money:
This is one of the major forms in which TV shows make money. This comes from the viewership; the greater the viewership of the show, the more money they make. Companies pay the TV network to air their products, and the prices vary from one network to another. The length informs the variations of the commercial and the type of content being aired. This is the top answer to how do TV shows make money.
Once the producers pitch their first episode to a TV network and it gets accepted, they are paid for it. This is because the TV show increases the viewership of the network. The producers then use the money earned to continue producing other episodes on the show.
3. TV Adverts
Ads are the greatest money bucket for TV shows. You will notice for every hour; a show runs for 40 minutes while the 20 minutes are for adverts. It is estimated that for every viewer of an Ad, the TV show earns $1 therefore, if the show has $45 million viewers, it will earn $45 million. Now you know – how do TV shows make money.
Another way TV shows make money is through subscriptions. For example, Netflix, Starz, YouTube, and HBO offer streaming platforms for TV shows that attract a greater number of audiences who are following and subscripting to the shows, and therefore the OTT platforms.
A streaming deal is then made between the two. They charge a monthly or annual fee to stream such content, which may be a movie or series. This is the modern answer to the question – how do TV shows make money.
They can also meet the budget needed to produce such shows if it has intriguing content. As such, no ads run while the show is still running. The monthly subscription fees paid by the viewers are enough to meet such costs and pay for the TV Shows.
One of the answers to the question – how do TV shows make money is Crowdfunding. Once a show gains the liking of many people, they may receive donations in bits from the TV show. In return, the donors may receive small tokens such as autograph signing and giveaway gifts.
Although, crowdfunding is a good way of making money, however, it cannot be a reliable source of earning, specifically for long-term projects. The donors may come to a place of ‘donor fatigue and stop donating. Therefore, as a producer, you should have other alternative ways to make money from your TV show to continue producing.
6. Network Bidding
Once a producer has established the TV show, and it is the talk of the town, they can approach several TV networks to bid on airing the show. The show must have gotten to where every TV network wants to air it so that they will bid.
The TV networks bid overwhelmingly because they know that airing the show will contribute to more viewers, and the more the viewers will be, the greater the profit. On the other hand, the producer and TV show will sign an agreement with the highest bidder and earn enormously.
7. Selling of Merchandise
People love being associated with brands. A TV show can decide to sell some items that will make the viewers want to own one and feel part of the show. The merchandise can be of great variety, from stationery to attires.
Once you place such an item out for sale and invite your fans to purchase it, they will be up and ready to buy it. You can set the price of your merchandise according to the demography of the viewers, and the price you think would be affordable for them. These can be sold online and delivered to the buyers, and they can also be in the form of a game.
Businesspeople have a huge interest in media and won’t invest in a TV show. Producers approach such people and pitch their ideas while requesting financing. They must prove to the investors that the show is worth investing in.
Details such as the budget, story plot, casing, and crew must be explained to catch the attention of the investors. If the producer convinces the investors, they agree on a deal. This deal may be to share the profit earned or receive credits and royalties from the production.
9. DVDs and Digital codes
DVDs have declined over the years, but they are still in use. Many fans who want extra entertainment and know what happens behind the scenes will buy the DVDs after watching the streaming TV show. Some years ago, if you would have asked someone – how do TV shows make money – this would have been the answer.
DVDs now have gone out of fashion and digital codes have taken their place. Digital codes are quite different from DVDs but will give the same experience; however, they are not hard copies.
The producers might include some interviews, blooper reels, and commentaries done for each episode. The cast and crew can make such commentaries to give more context to the TV show. This is another way that TV shows can make extra coins.
TV show sponsors collaborate with the show to display and advertise their products. In sponsorship, the sponsor’s product is directly featured in the show. It may be included in the lines saying how the product is good or just in the backdrop of the show. The brand is visible on the show. As the show earns money from the sponsors, the sponsors are marketed by the show.
For instance, if Coca-Cola wants to sponsor a show, the cast may be seen drinking Coca-Cola products. This sends a message to the viewers that Coca-Cola products are cool, just like the cast. The viewers will then be influenced to purchase these products by their favorite characters in the show.
However, a TV show should be careful with the sponsors they agree to work with. They must study their viewers to know if the product/sponsor will appeal to them. If they do not, they risk losing viewership. They must not also pick too many sponsors and turn the show into an advertisement hence pulling off the viewers.
Every producer’s dream is to sign a syndication agreement with a studio. Such an agreement entails a TV network paying an agreed amount of money to the TV studio for their show to be aired non-stop.
The TV show will continue to air even when no new episodes are produced. Every time the TV show airs, it makes money. The TV show must have gained a wide following and earn the studio royalties.
Behind the Scenes
We have now learned how do TV shows make money. It is time to shift focus to ‘behind the scenes’. At some point, you may think that the shows displayed on your TV screen from the TV station are live streaming, but it is definitely not the way they think. A lot of editing work is conducted before the show is aired on TV.
The shows can either be based on real-life events or entirely fictional. Scriptwriters get ideas from a show creator and then write the story, which is executed or played by the characters, under the guidance and supervision of a director or production company calling the shots. In some cases, the scriptwriter is usually the creator of the story.
Once the show has been acted, the producers approach a TV network that runs the first episode. If the episode meets the TV network’s standards and attracts good viewership, the network may decide to air it continuously. After understanding – how do TV shows make money and what goes on behind the scenes – let us understand how they work.
How do TV Shows Work?
An incredible TV show will bring a community around them and make animated conversations for friends, family, and friends. The first and the most crucial thing before establishing a TV show is to design the Structure of the Television Series Script.
The foremost thing to write by a scriptwriter is a Teaser Scene, followed by Act One, Act Two, and so on. Not just this, many steps are involved in producing a TV show. Majorly, there are 3 steps involved, including:
Pre-Production is the planning and preparation stage of a TV show-making process. During this stage, the director casts the leading actors, supporting characters, and other crew members needed to film the show. Moreover, schedules are made, and shooting locations are secured.
The production’s overall management, including how much money is spent, is managed and organized by the Unit Production Manager (UPM). Majorly, there are 4 steps involved in the Pre-Production process:
- Scripting: The first step is to write the script and create a script breakdown, including picking out the characters, location, sound effects, costume, visual effects, extras, etc.
- Legal and Budgets: It is a crucial step of the pre-production process that requires you to form a company or business entity, prepare a budget based on which you choose the show cast and shooting locations, create a production schedule, and assemble the crew such as casting director, costume designer, editor, makeup artist etc.
- Creative Planning: It is essential to start creative planning once you have recruited your department heads to determine and evaluate the requisites to turn the director’s vision into reality.
- Logistics: Being a show director, do you need to tweak the budget and shooting schedule? This stage is essential as it will determine if your department heads have larger cinematic goals than your budget can handle.
Once all these steps are followed, all you need to do is hire your production crew, start rehearsing and prepping and send out your call sheets.
This stage is also known as Principal Photography. It is when shooting begins, and the director’s initial vision can be captured in video and audio. At this stage, the director may hire an additional crew. For instance, a script supervisor to ensure the script continuity while filming.
An important note to the director is that the quality of the film you receive can only be improved after the Production stage. So, always ensure and move to the Postproduction stage only when you are fully satisfied with the visual and audio quality of the footage you get in this stage.
Once the footage’s audio and visual quality is passed and the shooting has finished, the project will move into the Postproduction stage. This stage primarily involves sound mixing, editing, and featuring any special effects if required.
The director can also reshoot and add another scene (If required) while, at the time, editors and sound mixers are doing their job to make the final episode ready to be aired. Once all the editing is done, the directors, producer, cast, and important crew members watch the final footage and decide if it is good for the audience and ready to be aired.
In conclusion, the entertainment industry is just like any other, and all players are in it to make money. TV shows are no different – they generate revenue through a variety of channels, leveraging their content and audience reach. This multifaceted approach enables them to secure financial stability and thrive in a competitive industry, ultimately supporting the production and continuation of captivating television programming.