How do most TV shows make money? In this article, you’ll find comprehensive information on how these shows earn cash.
How TV Shows Make Money
TV entertainment has recently witnessed a significant boom due to innovative programming like TV shows.
TV shows range from fiction, and non-fiction, documentaries, reality TV, award shows, and more. Now, these programs are highly successful because tons of money is made.
While that is true, few people understand how much money is made. For some, the entertainment value provided is good enough. Now, “value” is the primary focus here.
People primarily exchange money for value, and since TV stations offer value, they help generate income.
This brings us back to the question.
About TV Shows
This entertainment comes in different types to provide a little background information on what TV shows are about.
Such include medical drama, teen drama, romantic drama, comedy-drama, docudrama, sitcom, reality TV, game show, and soap opera.
Other types include animated series, television serials, telenovelas, and on-demand TV. It’s easy to see that TV shows and programming are vast here.
If these programs made no money, there’d be no incentive to produce them as the production itself requires substantial investments.
The Money-Making Angle of TV Shows
TV shows are designed to offer entertainment and educational value to viewers.
Viewers are likely to pay for these TV shows based on perceived value. There are several ways through which money is earned from TV shows. These include subscription services and commercials.
Other ways of earning money from TV shows include sponsorships, merch sales, DVD sales, subscription payments, ads, and investors. TV shows also make money through crowdfunding and bidding.
While some earning strategies are relatively new, others have been around for some time.
i. Subscription Services
In the age of TV streaming or on-demand entertainment, TV shows make a ton of money.
The same applies to cable services. Some of the top subscription-based streaming services include YouTube TV, Hulu Plus Live TV, Netflix, Amazon Prime TV, Apple TV+, Sling TV, and HBO Max, among several others.
These TV shows are packed with entertainment the viewer loves, which comes at a fee. These subscriptions are available on a monthly or yearly basis.
This is a straightforward method through which the TV network generates revenue. The viewer needs to renew their subscription to remain connected.
ii. Commercials
Commercials play a crucial role in how TV shows make money. When a show producer creates a show, they approach a TV network to market it.
The viability of such a show depends on whether it can attract many viewers. If the show is viable, rights are purchased by the network.
Now companies pay a ton of money to advertise their services and products. The network and producer earn revenues earned through such commercials or ads.
A set timeframe is dedicated to such commercials. The number of viewers also matters as it easily translates to revenue.
iii. Sponsorships
Sponsorships are another means of earning revenue from TV shows. This doesn’t happen automatically but is negotiated when TV producers approach corporations and businesses.
Of course, there needs to be some form of benefit for the corporation or business for sponsorships to happen.
When it’s evident that there’s money to be made, corporations or businesses may approach the producer. Money is given to the producer to get credit (to the corporation or business).
Giving credit to the company will likely result in more patronage by show fans.
iv. Merch Sales
TV shows can leverage their popularity of the show to sell merchandise.
Examples of shows that have followed this route of revenue generation include Stranger Things, Wallace & Gromit, Fraggle Rock, The Mandalorian, and many others.
Merch items may range from apparel to collector’s items and several more.
While such merch won’t take up a substantial part of their revenue, they significantly improve earnings as fans seek an interest or token of their beloved TV show.
v. DVD Sales
In recent times, there has been a steady decline in the use of DVDs. This has generally affected sales through this medium. While that is true, DVDs still present income-generating options for TV shows.
In the past, this was one of the primary ways shows were recorded and distributed.
Exclusive content was mainly found on DVDs which made them popular with fans. In the age of streaming, DVD sales won’t make much of an impact as most people prefer to stream their entertainment.
Production companies have primarily focused on more modern ways to sell content.
vi. Investors
Investors always seek to put their money into profitable ventures. TV shows are part of different investment types considered by investors.
For an investor to be interested, they must learn how the show works and the money flow. Investors get their returns in several ways, mostly agreed upon by the deal.
Sometimes, it’s safer for an investor to invest in a TV network than a show due to several factors. Based on this reality, it still benefits TV shows as they get some benefits from the TV network.
vii. Crowdfunding
As the name suggests, crowdfunding involves pooling resources together by small-time investors to invest in a profitable venture.
TV show producers can access these funding sources by pitching their ideas and the budget required for takeoff.
A pitch that meets the minimum crowdfunding requirements gets the investment amount. Producers must provide as much detailed information as possible to increase their chances.
viii. Bidding
Certain TV shows earn money from bidding. Here, TV networks bid for airing rights to the show.
This happens when the show has been appropriately hyped and generated much buzz among fans. Here, the airing right likely goes to the TV network with the highest bid.
These are viable ways through which TV shows make money. While some of these methods (like DVD sales) have gone out of fashion, others continue to earn significant revenue for TV shows.