The Changing TV Landscape: Will the Current Changing Model for Financing TV Production Lead to a Regular Stream of Short-Lived Shows and Hasten the Bursting of the Bubble?

By | July 9, 2015

This series looks the changes that the television industry is currently experiencing and how this will impact the future of the medium.

Previous Article in this series: Original Scripted Programming Continues to Expand, but at Some Point the Bubble Must Burst

the-messengers-cw-cancelledIn a recent post looking at The CW’s cancellation of The Messengers, I commented that the network appeared to have given up on the show before it even aired and that the millions of dollars they spent to produce it was just money out the window.  However, as I have been doing some research on the current environment of ever-expanding original scripted programming on the television networks and streaming channels (more on that in the previous post), it appears that may not necessarily be the case.  The model for covering the production costs of a series has changed and we could see plenty more of these one-season-and-done shows as the networks adopt a spaghetti-against-the-wall strategy in the current scramble to grab a share of the continuingly fractured audience.  But the dangers are that could speed up the bursting of the currently expanding bubble.

In the old model (which the networks have yet to completely let go of), recouping production costs for a show was heavily tied to advertising revenue (as well as carriage costs for the cable channels) which were closely dictated by the Nielsen ratings.  And the ultimate goal was for a show to amass enough episodes to live on in reruns in syndication which is where it could then become very profitable.  But the syndication market typically wants between 80 and 100 episodes or more episodes from a show so that it can run nightly for several months without repeating itself, and with so many shows out there it is getting increasingly harder to maintain an audience for that long.  But the networks continue try and find that Walking Dead / Game of Thrones / Sons of Anarchy type hit that rises above the rabble, leading to them throwing more and more attempts at us.

It would seem this would be a waste of money considering the number of shows that continually produce less than two dozen episodes, and in the old model there were plenty of shows that ended up  unprofitable for their networks.  But advertising revenue was more plentiful then, and the short-lived shows have always been looked at as just the cost of doing business.  These days, though, networks are having a harder time collecting enough money from sponsors to cover the production costs of shows, so they are finding other means to subsidize the costs that could make even a short-lived show profitable or at least bring it to the break even point.

International partnerships with networks in other countries has become quite common of late as a means of leveraging the cost and risk of producing a television series.  Recent examples of this include Syfy’s partnership with the Canadian Space Channel on the two new shows Dark Matter and Killjoys as well as AMC’s partnership with Channel 4 on Humans.  These partnerships differ from the import shows like Bitten and Orphan Black in that both networks are actively involved with the ownership and production rather than one just leasing the airing rights for a show the other owns.  So if Syfy were to back out of their partnership on Dark Matter and/or Killjoys, the Space Channel may not be able to afford to keep them going on its own, whereas if Syfy elected not to carry the latest season of Bitten, the show could still potentially continue on its home channel.  The financing will of course vary depending on the situation, but that gives a general overview of the arrangement.

We are also seeing more partnerships with the streaming services and with international backers who have an interest in worldwide syndication.  Both of these come into play for the CBS shows Under the Dome and Extant, with Amazon having exclusive rights to stream new episodes after the live broadcast airs and international partners contributing financially in return for syndication rights.  The shows will be aired in other countries (generally after they have completed their initial broadcasts), and the backers get a chunk of that revenue.  This makes both of these shows profitable to CBS before they have even aired and their fates are not as closely dictated by the Nielsen ratings (though those have been quite low as of late).

There are also other sources of income around these days to recoup costs that were not much of a factor as recently as ten years ago.  Hulu has contracted with many of the networks to air the latest episodes of many shows (usually the past five episodes are available and always after the live broadcast), and in some cases the prior seasons are available as well.  Amazon Instant Video, iTunes and other sources also have the latest episodes of new shows available for sale which provides some additional income.  And nearly all the new shows (no matter the episode count) get a DVD and/or Blu-ray release these days, which also adds some revenue.

And there are still other means of additional financing that were not available or less viable for the old model which appear to have alleviated some of the financial risks of producing a television series and which has helped lead to the explosion of scripted programming available on television.  And this has resulted in the spaghetti-against-the-wall strategy that the broadcast and cable networks are taking, throwing as many shows out there as possible hoping that one or more will stick.  But there’s only so much television that the viewing audience can consume (though their capacity does appear to be quite large), and plenty of these shows will end up sinking if they can’t grab a measurable enough slice of that audience.  Even though those shows might be able to break even or help it pull a small profit in the current environment, the ultimate goal is always to make the big money.  Low-performing entries like A&E’s The Returned, USA’s Proof, and CBS’ Extant may not be bleeding their networks, but why tie up resources and schedule space if the returns are low while the next Walking Dead or Empire is still out there?

And these low-flying shows will come and go after a season or two, further frustrating the viewing audience and possibly hastening the eventual bubble burst.  People usually get invested in a show once they have decided to follow it, and if it doesn’t stick around for more than a year or so they will become less willing to invest in the next show the networks have to offer.  This is especially true of the more serialized entries (which have become the norm of late) that leave major storylines unresolved after cancellation.

So while new models for financing television shows have led to many more viewing options on television and also less reliance on the increasingly outdated Nielsen ratings, the willy nilly approach by the networks to crank out as many shows as possible could speed up the bursting of the current bubble that must surely come at some point.  And when that does happen, I expect that the television landscape will go through some upheavals and emerge with a different look than the older, outdated model of the past.  What will that look like?  More on that in the next post in this series.

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