How much do TV shows really cost?

December 14, 2006 3:20 AM

Imagine a world with no TV advertising, and no sponsorship with TV shows being view on demand and funded by pay-per-view by the viewer. How much would (or should) a TV show actually cost?

Even though a lot of TV is paid for by directly by the viewer via subscription channels, a lot of the cost is offset by sponsorship and advertising...

With the increased use of DVRs (also triggered by over-saturation of TV advertising) more and more people will be skipping adverts, until the big corporations realise that they are no longer cost-effective. At this point, channels and programme makers will have to look for other sources of income.

So what if there was no advertising at all, and everything would be PPV. How much would your TV shows cost?


A couple of current data points are:

• The cost of a show on iTunes: $1.99
• The cost of a show on a DVD: ~$3

but neither of these are fair comparisons as you can watch the show as many times as you like: I only want to see it once! I also believe that these are priced at a value the market will accept, rather than something more approximating the cost.

I was wondering if anyone has an idea of the total cost/viewer of the advertising slots around a popular program?


This question is also prompted by me wanting to watch the new Battlestar Galactica. The Belgian networks have not yet licenced it, and seem to have no intention of doing so. My only ways to get hold of it are therefore:

• Buying DVDs from the UK which seem way to expensive (UKP50 or $100 for 20 episodes = $5/ep), for watching each episode once
• *cough* file sharing networks, which I don't like the idea of: I personally feel that if I like something, the creators should be rewarded for their work

So I can either pay what I feel is 'too much' or 'too little' ($0), and I was wondering what would be the true cost...

I suppose another related question is how much would you be prepared to pay!

posted by nielm to media & arts (21 comments total)

Way too much. Each network would have their own prices. So you would virtually pay for every single network you watch.
posted by apple at 3:35 AM on December 14, 2006

The prices of the current options have little to do with anything except perceived value, the studios have already paid for the programming with their advertisements (although I hear future DVD revenue is more and more factored into the decision to renew a show)

I think maybe a more relevant number would be Total Advertising Revinue/Number of Viewers. Anybody know those numbers for Battlestar Galactica or any other big show for that matter?
posted by shanevsevil at 3:56 AM on December 14, 2006

I think I paid somewhere in the range of $25 US /season from Amazon for the only show I've ever bought on DVD: Scrubs. That works out to *roughly* $1 and change per episode. And that seems about right to me. Sopranos, on the other hand, is way too expensive for me, as I've seen it regularly in the $100+ range per season. Maybe it's gotten cheaper over the years, but I ain't paying that much. It really depends on how easy the networks make it to view my shows multiple times and/or many-shows-in-a-row. For one-time-only shows, available on demand? I think about a quarter would work for me, if I *had* to pay. But, having said that, if I was already paying $60+ per month for cable? I would be willing to pay *zero*. The costs from the cable companies would have to drop significantly for me to be willing to pay to watch network shows.
posted by antifuse at 4:31 AM on December 14, 2006

I think the answer to your original question of 'how much should a TV show cost' can only be the same as your final question of 'how much would you be prepared to pay'.

A 'fair' way to work out the price of an item would be to calculate the total costs of its production, add a 'reasonable' profit margin (to make it worthwhile producing anything in the first place, cover the costs of investment etc.) and then charge that amount. If you were making bespoke tables then this would be a fine way to calculate the price of your tables (there'd be some leeway in exactly what a 'reasonable' profit margin was but the market would sort that out).

However, this doesn't work for TV shows since only a small amount of the cost comes from getting the product (the show) to the buyer - burning a CD with a show and sticking it in the post costs pennies - the up-front costs of producing the TV show in the first place are much greater. A 'fair' way to deal with this up front cost would be to split it across all the buyers equally so each person pays a share of the initial costs.

However, until the show is sold (and has finished being sold, whenever that would be), no-one knows how many buyers there will be, so there's an unknown in your equation:

Fair Show Price = Duplication and Distribution Price + (Total Show production price/number of copies of the show sold) + some profit

And since the show price affects the number of copies that will be sold, the calculation gets even more intractable.

Basically, there is no such thing as a fair price for something like TV shows, as it is impossible to calculate it. The best that can be done is to work out what people will probably be happy to pay, work out how many people will probably pay that for a proposed show and then try to get funding based on those figures (and then hope it all pays off).

(As a suggestion to solve your lack of Battlestar Galactica - are there equivalents to LoveFilm in your area which would allow you to rent the DVDs for a short while, then return them?)
posted by koshmar at 4:31 AM on December 14, 2006

koshmar - isn't lovefilm in europe as well? I seem to remember it being for more than just UK. I'd check but their site is down at the moment.

Back to the original question: The BBC does largely what you are asking. Info on the licensing fee
posted by srboisvert at 5:12 AM on December 14, 2006

I don't think you can use the cost of an episode on DVD, as the show has already been paid for by advertising when it was broadcast, the DVD sales are just gravy. I would suspect a show released direct to DVD would cost significantly more.
posted by PenDevil at 5:20 AM on December 14, 2006

TV episodes cost anywhere from a few hundred thousand to a million dollars or more per hour, depending on special effects, location shooting, etc.

So, just divide that by the number of viewers. If there's only only one viewer, your pay-per-view expenses will be a few hundred thousand to a million dollars or more per hour. Hopefully you have one of those AmEx unlimited cards to charge it on.

If every human on earth sees it, they each only have to give you a fraction of a cent. So your assumptions about viewership play a rather large part in making this calculation.

TV shows are exactly like other software. A high initial cost of production, but zero marginal cost of reproduction. The Free Software people think the cost of such things should be the marginal cost - zero. They've done that successfully with a huge amount of software, such as the piece that I'm typing into right now. So far, there's only a moderate amount of television distributed in a similar way.
posted by jellicle at 5:57 AM on December 14, 2006

For a point of reference, a little Googling indicates that HBO spends (or spent) $1.5 million per episode of The Wire, $4 million for Carnivale, and $5 million for Deadwood. (I couldn't find The Sopranos, but its probably even higher.) Since HBO relies on subscribers rather than advertisers, it's the best comparison for this kind of question. Any show that would be funded through viewer sponsorship would have to be the kind that would attract a select but intensely interested audience.
posted by Horace Rumpole at 6:12 AM on December 14, 2006

At ER's peak, NBC paid $13 million per episode to Warner Brothers. They paid $5 million per episode to Castle Rock for Friends.
posted by smackfu at 6:41 AM on December 14, 2006

Smackfu/ Horace Rumpole: thats the sort of thing I was looking for, any idea of the viewing figures for NBC for those episodes?


For those saying that it is impossible to figure it out, as it currently stands the same sort of econonmics must already exist:
A studio makes a show for $X and sells it to various channels for $Y.
The channel estimates the number and demographics of the viewers and sells advertising slots for $Z/sec...
So there is already a price/head calculation going on somewhere, just like there already is for movies...

(Oddly In the TV world, we - the viewers - are not the customers: the true customers are the advertisers: we are the 'product' being sold!)


I realise that a fully PPV model will tend to squeeze out 'niche' programming in favour of 'popular' programming, but the same sort of thing happens already (compare: Firefly, Global Frequency, Futurama to the proliferation of Reality TV)


BBC licence fee... Thanks for that link I had forgotton about "the unique way the BBC is funded" :)
Take the part that goes to TV: UKP6/month/household... say 2 persons average per household, and say half of a persons 4hrs/day viewing is to BBC channels, so thats 5pence ($0.10) per hr of programming. (damn cheap!)


DVD rental is another data point: 5 eps/DVD, EUR2.5 per night rental = EUR0.5 per show.


(thanks for the BSG suggestions. Netflix/LoveFilm's equivalent in .be is dvdpost, which only has the old series in it's catalogue, and the rental DVD shops near me do not have it either.)
posted by nielm at 7:36 AM on December 14, 2006

NBC liklely paid Castle Rock for "Seinfeld" not "Friends." Friends (like ER) was a Warner Bros. production. And that was a licensing fee the studio charged the network, which does not necessarily match-up with the cost of production. When shows like "ER" begin, studios make them at a sizeable loss, gambling that as the show increases in popularity they can increase their licensing fees later on. So that 13-million charged by WB for ER likely included a profit, whereas the 5-million (hypothetical) it paid in ER's first few seasons may have included a loss to WB.

Generally, advertising does not cover the entire cost of epsisodic production (at least, not for scripted series -- I have no idea how "reality" shows break down); the shows are produced at a loss, and recoup these losses in their secondary markets (foreign distribution, domestic syndication, DVD sales, etc).

And looking at HBO doesn't shed much light, either. Shows like "Deadwood" and "The Sopranos" can support higher budgets because they are often sold overseas as movies for theatrical distribution, or strung together as tv mini-series (in addition to the their espisodic sales in overseas markets). So the subscription rates are only one source of income. Also, these shows are probably seen as loss leaders for HBO. Dunno if you can sustain a loss leader when you sell access to your network one bit at a time rather than on a monthly basis.

This just looks at the supply side; the demand is what would set the price, and it's difficult to imagine people paying more than 2-3 bucks for a show. So the production costs would work backwards from there, I suppose...
posted by herc at 7:57 AM on December 14, 2006

Good catch, it was Seinfeld.
posted by smackfu at 8:03 AM on December 14, 2006

The cost of a show on iTunes: $1.99

if you buy per season or per set amount, the cost is more like 65¢ per episode.
posted by mdn at 8:54 AM on December 14, 2006

Smackfu/ Horace Rumpole: thats the sort of thing I was looking for, any idea of the viewing figures for NBC for those episodes?

But herein you are making a fatal flaw in comparing the network viewership and then directly translating that into pay-per-viewership. You can't really answer this question because nobody knows how people would react to a show that only exists as pay-per-view episodes. I suspect that you would find that many would react very negatively to having to pay for each episode, and so the viewership would be much smaller. That's the issue with the question, is that you can't just take "current cost of a show" and "current viewership of a show" and then divide, because you're essentially talking about a whole new paradigm with which people are completely unfamiliar. They ARE used to sitting down on their couch in the evening and flipping around channels, as they've been doing that for more than a half century.
posted by Rhomboid at 9:38 AM on December 14, 2006

Here's a 2005 article on HBO's ratings. Sopranos comes in around 10 million viewers, Deadwood and Six Feet Under both around 2.5 million. Clearly not every one of those viewers would pay specifically to fund more episodes of those shows, but they care enough to pay for an HBO subscription, which certainly makes them more engaged than a network audience.
posted by Horace Rumpole at 10:41 AM on December 14, 2006

Well can't we just do the math on a hypothetical show and delivery system?

Say a show costs $5 million per episode like HBO's Deadwood. And then say the distribution is completely commercial free - in other words the only way the shows creators/publishers (we can use the word "network" but it's a little incorrect in this model) can make money is by the audience paying for the show directly out of pocket.

Also, let's pretend that the distribution is completely flat meaning that it's... I dunno... released on the internet for subscribers rather than being broadcast, syndicated, or distributed on DVD.

So what you have is a $5 million dollar, direct-to-paying viewer episode. So if you have 5 million viewers (let's assume the distribution is worldwide, simultaneous) you break even charging $1 per episode. 10 million viewers and you double your money... etc.

$1 per episode seems reasonable. If the show has a new episode every week then you'll wind up paying $4 per month.

Consider that we live in an era where people routinely pay $100-$150 per month for cable. Ignoring sports and news channels how many television shows do you really watch per week? Four? Five? So on our dollar per episode model you could ditch cable and spend $16 to $20 per month to get four weeks worth of your favorite tv shows. And if ten million of your friends do the same the producers double their money - win-win.

Now there are a lot of factors standing in the way of a model like this existing. For one if a company like HBO cuts out the middleman (cable providers) and delivers shows direct to the viewers you can expect the cable companies to fight tooth and nail via their lobbying arms, etc. Two, this still a little far fetched. Most consumers don't have a computer attached to their television, although this is increasingly becoming a reality with TiVo-like boxes, etc. Lastly don't underestimate greed. I don't know what the profit margin is per episode of Deadwood, but through a combination of subscribers, DVD sales, syndication, ad-revenue, merchandising, etc... HBO may make it's investment back several times over - and the show may continue generating revenue for years, even decades to come. This type of income would be hard to reproduce in a pay-per-download model. So there is probably very little economic imperative to adopt the model I outlined above.

However, this model already exists in a very crude and illegal form already: bittorent. It's an open secret on the interwebs that shows like the Sopranos are available within minutes of being boardcast via bittorrent. So it's a bit of an untapped market... although convincing people to pay for something that they know how to get for free may prove to be difficult...
posted by wfrgms at 11:11 AM on December 14, 2006

I don't think using Deadwood is a great example, as it's definitely on the lavish side of things, in terms of production values.

But also the logic of "you pay $100 to $150, and only watch maybe five shows per week" neglects an important fact -- people like the all-you-can-eat flat rate model. They are willing to pay extra for the freedom to watch as little or as much TV as they want. If you start charging per show people will resist because they will see TV watching as a metered event, where they have to decide carefully what they are going to watch, and self-regulate themselves so that they don't go over a budget, and so on. This goes double if the episodes cannot be stored/owned for later watching or can only be viewed once (cf Circuit City's spectacular failure with DivX.) Many people don't want to have this kind of worry, they want to be able to see TV as a hassle free relaxation time. These flat rate plans for all kinds of things (internet, wireless, parking, whatever) are prevalent even if a metered-type plan would likely save them money based on current usage.

I mention all this because I'm trying to make the point that you can't compare current television viewership numbers to potential viewership in the pay-per-episode model, because it's so radically different than how things work now that people will resist, at least initially. And this means the cost will be higher than if you just divide the current production price by the current viewership. And also these calculations make no provision for profit, as nobody is going to do this if just just break even on production costs. So I think $1/ep is wildly underestimating what it would actually have to be to fully support a show.
posted by Rhomboid at 11:46 AM on December 14, 2006

From personal opinion based on how we currently watch TV, our family would probably be happy at $1 per episode as long as it came without commercials and was available in batch quantities - ie. decide to start watching Heroes - download all 11 episodes for $11 and have control of how and when and how many times we watch them within our house/family (TV, laptop, IPOD whatever). Probably $60-$75 a month for all you can eat/watch would be OK too as it would more or less mirror what we would normally pay for cable or satellite BUT (and there is a big BUT) the all you can eat plan would have to more or less have EVERYTHING available (sort of like bitTorrent or Usenet as they are currently operating).

On a slightly different track, given a secure and trusted means of payment (investing?) we would (in a minute) prepay/invest $50 (without a second thought) to $100? (probably starting to push it) for watchable product from someone we like. Given, lets say, 20-25 hrs of product for $2.50 - $5.00 per hr for episodes from J. Michael Straczynski (Babylon 5), Joss Whedon (Buffy/Angel/Firefly), or ??? (writer for Dead Like Me and now Heroes) the numbers start to get interesting. I think there are enough Browncoats (Firefly fans) out there that, given a workable infrastructure there could be viable funds available to jump start properties that maybe can't provide the 20m /week viewing audience but can still produce 2-3m rabid and loyal fans. I think something like this will happen in the next few years and then everything in TV/video/movies will change - again. Just my $0.02 worth.
posted by gsquared at 3:19 PM on December 14, 2006

Here in the UK we pay the BBC £131.50 ($257) for a compulsory one year TV licence.

That funds 4 TV channels and 10 radio stations. The revenue is split between home produced shows and bought-in movies / programmes which are all shown without advertising*

* you do get adverts for other BBC products and services
posted by Lanark at 3:53 AM on December 15, 2006

Here in the UK we pay the BBC £131.50 ($257) for a compulsory one year TV licence.

At least it goes to something useful. The BBC produces reasonably entertaining shows (at least, I find some of their product entertaining). I have no fucking clue what the hell the TV licence pays for here in Ireland, because it's certainly not any sort of "quality" entertainment on the Irish channels. I also find it absolutely ridiculous that if you *own* a TV, you are required to get a TV license... even if you don't have cable! Like, if you were planning on using it strictly for videogames or movie watching, tough. You own a TV, you pay the license. Crazy.
posted by antifuse at 6:42 AM on December 15, 2006

Great question - I wish there were more shows available for individual purchase. I do not have cable/satellite, and I never will pay for TV unless they do away with the commercials. However, I would definitely occasionally buy single episodes of shows, if the opportunity was available; say, a documentary about the Titanic on the National Geographic channel. But I would buy it to view on my TV - not an iPod. Sure, I might pay a dollar, even for watching it only once. (Less if commercials were included.)
posted by IndigoRain at 11:34 PM on December 15, 2006