Even if you’re not an avid fan of TV shows, it’s hard to ignore the popularity of some of the biggest names on the screen. Some actors have even used the shows they’ve worked on as a stepping stone toward highly successful and lucrative careers. And new shows keep coming out on a regular basis – perhaps more than ever before in history.
With that in mind, how do TV shows actually make money? Most people are familiar with options like advertisements and broadcast syndication, but it goes much further than that. Through the years, TV producers have figured out a variety of new ways to profit from their creations. And with the rise of the internet over the last two decades, and the opportunities that have opened up, it looks like we could see even more creative twists on classic ideas.
How Do TV Shows Make Money?
The profits generated by TV shows are mostly tied to promotions of different kinds. This includes direct advertising, product placement, as well as syndication and streaming deals. Some shows have also seen a lot of success with merchandising deals, live events, and other auxiliary ideas. In some cases, those have turned out to be some of the main sources of income for the people running certain shows.
Every show is different though. Some might leverage a certain approach more heavily than others. Some shows also have the benefit of being relatively independent in their first few seasons due to external investments or crowdfunding. Here are some of the most common ways that TV shows make money.
Advertising is probably the most common and straightforward way for TV shows to make money. It works in various forms of media, and is a tried and proven method for generating revenue. When a show runs on TV, the network would insert ads at key moments and share some of the revenue with the producers. The same goes for streaming networks that utilize ads.
A smaller percentage of revenue may also be generated from ads in other places. For example, the show’s website might have banners and other promotions running regularly. Actors could set up blogs, podcasts, and other similar productions that they can leverage for ad revenue. Running a blog is still highly profitable today, so it’s no surprise that networks have been doing their best to explore these opportunities to their full potential.
Broadcast syndication refers to leasing the broadcasting rights to a show to a specific network, or multiple networks. In the past, this was the main source of income for TV show producers. While that’s not the case for all shows nowadays, syndication deals remain a profitable and attractive opportunity for showrunners.
In fact, networks might occasionally engage in bidding wars for the rights to a specific show. If a show has already proven to be highly successful, or is showing a strong potential for its future seasons, many networks will be interested in having exclusive broadcasting rights instead of sharing them with other networks.
And since this means compensating the producers adequately for the opportunities they’d miss by not getting any other syndication deals, the price for the rights tends to go up significantly. Only a small portion of shows enjoy the privilege of being the subjects of these bidding wars – but when it happens, it can easily set up the show financially for several seasons.
Streaming is very popular nowadays. It’s also one of the main ways for TV shows to make money. The idea is similar to broadcast syndication. A streaming service pays for the rights to offer a specific show in its catalog.
Sometimes those rights are granted exclusively, but in other cases a show may be available on several streaming platforms simultaneously. Platforms may also pay to have their own shows produced. Netflix has been utilizing this approach very aggressively, especially since some of its competitors started revoking the streaming rights to their own shows as they saw an opportunity to increase their profits.
Streaming could sometimes bring in extra profits through ads, though this is a relatively small part of the overall profits. Viewers are generally not very open to the idea of paying for a streaming service and having to sit through ads, so platforms are still treading very carefully in this direction. But there are various indicators that it’s going to become a more popular approach in the coming years.
Streaming services earn money through various means other than subscription fees and ads. For example, they might sell viewership data to third parties. They could also analyze viewing habits for their own benefit, streamlining their production and making it a safer investment.
Product placement is a bit of a controversial topic among viewers. Some hate it with a passion, while others ignore it completely. Some also see it as an entertaining nod to the real world. Product placement involves inserting various products into the show. Sometimes this is done very subtly – for example, a character might have a bottle of their favorite drink visible in the background of a scene.
In other cases, it’s not so subtle at all – like a character delivering a several-minute speech about their favorite fast food chain. You might also see billboards that advertise real products in the backgrounds of some scenes. Cars, smartphones, and other similar products are very popular for this type of promotion.
The problem with product placement is that it’s limited in capacity. A show can only insert so many products before customers start to question whether they’re watching a show with ads, or one big ad with some occasional character development thrown in.
Even though many people enjoy using Netflix, Hulu, and other similar streaming services to watch their preferred content these days, DVDs don’t seem to be going out of fashion anytime soon. DVD sales remain a popular stream of revenue for many shows. This is especially true in countries where people don’t have access to high-speed internet connections and therefore can’t rely on streaming too much.
DVD sales can also attract collectors. Box sets can sometimes sell for quite a lot on the second-hand market if they’re out of production and associated with a crowd-favorite show with a large audience. They also make great gifts.
Another benefit to DVDs is that studios can potentially leverage their communities as affiliate marketers by signing up for various programs. Many people use movie affiliate programs as an extra source of income.
Unfortunately, profits from DVD sales are usually not that great. Consumers aren’t typically willing to pay a lot for a set of several seasons, so prices must be kept low. At the same time, there’s a large production overhead associated with DVD sales. Just like any kind of physical product, the profit margins tend to be rather thin. This means that only shows with a very large audience can reliably profit from DVD sales.
Merchandise is still a big factor in TV show profits. Just take a walk down a busy street and you’ll inevitably see at least a few people wearing a t-shirt, cap, backpack, or something else themed after their favorite show. Collectible items, like Funko Pop figures, are also very popular among some audiences, and the people behind certain shows have been taking full advantage of that fact.
Merchandising rights can also be leased or sold completely. That way, a show can still profit from merch sales even if the producers aren’t directly responsible for creating any of the products themselves. Showrunners may even lease those rights to fan creators. The rise of platforms like Redbubble has driven up the popularity of this market.
And unlike DVD sales, show merchandise tends to have a better profit margin. That’s because many of the items are typically sold with a high markup. Since there are no alternatives on the market, buyers don’t have any choice but to get the official merch. Most people are well aware that they’re buying overpriced products, but they still like the idea of supporting their favorite creators.
This is not a way to generate continuous revenue, but when done right, it can bring in a lot of extra money in a short period of time. Fans love to interact with their favorite actors, producers, writers, and everyone else involved in the production of the shows they follow. Some showrunners might occasionally organize live events and sell tickets to them.
With a large enough venue, and tickets priced reasonably high, a single event can generate a lot of profit. On top of that, showrunners can take the opportunity to sell some merchandise, promote products during the event, and bring in money through various additional means.
People attending these events would often post about them on social media, which can drive up engagement for the show and draw even more attention to it. However, planning and executing an event like this takes a lot of effort, taking away from the time showrunners have to actually work on their shows. That’s why they’re relatively rare. But on the bright side, this also helps create an impression of exclusivity, making it easier for showrunners to promote these events.
With some luck, a show can attract the attention of investors who see potential in it. This can provide a show with a huge initial boost, accelerating its production and increasing its value. Investors might also come in at a later point. For example, after a show has already released a couple of successful seasons.
The downside to accepting external investments is that showrunners usually have to give up a portion of their profits in return. Investors are looking to maximize the return on their spending, which means that they would typically ask for a large percentage of profits. They might also ask to get paid in alternative ways, for example by getting exclusive merchandising rights. Some investors might also demand a certain degree of creative control over the production.
TV shows can also license their characters and other content for other media. Movies are quite popular in this regard. Inserting a character from a popular TV show into a major film release can result in a lot of extra attention for both productions. If there is little overlap between the two fan bases to begin with, showrunners can sometimes see their viewership numbers growing steadily after engaging in a deal like that.
Are TV Shows Still Profitable?
Despite the market being more saturated than ever, TV shows remain very profitable and keep drawing in new viewers. BBC Studios recently reported a record growth of 50%, for example. And it looks like the popularity of TV shows could continue to climb.
People’s habits have changed a lot over the last couple of decades. Many prefer to sit down and watch a couple of 20-minute episodes to relax, instead of committing to a full 2-hour movie. Networks have taken notice and have been actively researching ways to produce even more content in similar formats.
Frequently Asked Questions
Q: What are some of the most profitable TV shows in history?
A: The list of most profitable TV shows includes a good mix between old classics and recent releases. It should be no surprise to see “The Simpsons” and “Grey’s Anatomy” around the top. “The Simpsons” reportedly earned over $120,000 for a 30-second ad spot just a couple of years ago. “Modern Family”, despite being relatively recent, is also among the top earners. Reports indicate that the show has managed to regularly pull in more than $200,000 in ad revenue for a 30-second spot. “Friends”, “The Big Bang Theory”, and good old “Cheers” are also some of the most profitable TV shows in history.
Q: Do TV show actors get paid for reruns?
A: There is no universal answer to this. It depends on the individual deal of each actor. Some do get paid for reruns of shows they’ve worked on, while others receive nothing. The main cast of “Friends” is a good example of actors that do get paid for reruns, earning impressive amounts of money even today, years after the show has ended. But not everyone is so lucky. In other cases, actors try to capitalize on their fame through other means – some successfully, others not so much.