Television and TV shows are a massive part of many people’s lives. They provide entertainment, information and even teach us some new skills. So a new season is significant, as is the canceling of your favorite show. But unfortunately, as with any business or product, there must be a way for the company to make money, and TV shows are no exception.
Have you wondered how TV shows make money? Aside from advertisements, the answer might surprise you.
How do TV shows make money? Let’s take a closer.
How Do TV Shows Make Money? (10 Ways)
While generating advertising revenue is an obvious way for TV shows to make money, there are several other ways in which TV networks generate revenue. Here are the top 10 ways that TV shows make money.
The first way in which TV networks make money is through investors. Many TV shows are funded this way. In exchange for funding, the production company, television networks, and/or franchise agree to produce a certain number of seasons, and the investors (hopefully) receive a portion of the profits.
A TV show may also use crowdfunding to raise funds. Websites like Kickstarter, Indiegogo, and Patreon are examples of this type of funding. These sites are used by fans who want to donate money towards a project they believe in (TV shows included!). Like with investors, often, TV shows receive crowdfunding revenue to get projects started. For producers, crowdfunding may be a lucrative money-making and marketing tool.
Advertising revenue is a common way for networks and streaming services to make money. They are similar to commercials, except with television media; they are more often seen on streaming services such as Hulu.
With TV advertisements, the emphasis is on short stints where featured products are shown to viewers. In addition, networks will sell advertising spots in their program, and many of these are sold at a premium due to viewers being captive while watching their favorite shows.
Additionally, there is a free and premium version of advertising, where TV show producers may also feature free ads that they endorse or feel strongly about.
Another way TV shows make money is through sponsorships. Companies pay to have their product advertised in the show or during commercial breaks. For example, have you ever seen a particular car or drink brand in a TV show? That isn’t usually by coincidence.
While brands pay a lot of money to have their products featured in TV shows, they don’t usually have much say on how the series is run or written. Nevertheless, popular characters using their products is always good for business.
An example of TV show sponsorships includes Verizon Wireless paying for their cell phone service to be included as an integral part of the plotline in the TV show Revolution.
Syndication is the process of selling independent tv shows to other networks. In other words, a popular show could be sold and run on another network. Syndications could be international or even local, depending on the show.
An example of syndication is The Big Bang Theory, which was initially shown on CBS, and later had the broadcast rights sold for syndicated shows.
TV shows also use commercial breaks to earn money. Commercials are similar to the advertisements discussed above but are more commonly seen on standard TV networks. Instead of a few short ads, most commercial breaks on TV networks total roughly 15-20 minutes per hour.
As with advertising, companies will pay a television network for their product or service to be displayed during the program’s break. The more popular the show and the better the time slot, the more advertisers pay to run their product ads.
Many television industry networks make most of their revenue through commercials. With commercial revenue translating to roughly $1 per viewer, a TV network with a popular show could make thousands or even millions of dollars per episode in ad revenue alone.
A television show can also make money through subscriptions. Streaming services are built on subscription fees from viewers. Additionally, cable networks can charge a fee for people wanting access to their shows on-demand, or they may require users to sign up for an entire cable TV package to get the preferred television series. Many networks also partner with streaming services to offer shows for a fee.
For instance, HBO requires its subscribers to pay subscription fees before releasing any of its Netflix shows.
Popular TV shows can also make money from promotional merchandise sales. T-shirts, props, collector’s items, and other show novelties are popular among fans and bring significant revenue. In addition, specific TV show props that are significant to the show could bring in significant revenue alone.
Furthermore, with today’s eCommerce world, TV shows can sell their merchandise directly to viewers without the need for a middleman, bringing in even more revenue.
Game of Thrones and Yellowstone are examples of popular shows that bring in revenue through merchandise sales.
9. BluRay/DVD Sales
Another common way for television programs to make money is through BluRay and DVD sales. They will release DVDs, which can then be resold at a profit. For example, Downton Abbey has done this.
DVD and BluRay sales are also a way for networks that own the rights to popular older shows to continue bringing in revenue long after the show has ended.
10. Network Bidding
Finally, television networks are known to engage in bidding wars over the rights to a TV show. This is often seen with popular shows that have proven their revenue potential. For instance, in recent years, AMC was bidding against other networks for the rights to air The Walking Dead.
Check out this article on how to get paid to watch movies!
How Much Do TV Shows Make?
Now that you know how TV shows bring in revenue, how much do they actually make?
Unfortunately, the money a TV show makes varies drastically depending on the network, viewership numbers, and syndication. Therefore, it can be hard to predict how much a particular show will make.
However, the $1 per viewer in the commercial revenue stat listed above is a good start. Add in sponsorships and other revenue streams, and the average TV show will pull in several hundred thousand to potentially millions of dollars per episode.
Are TV Shows Profitable?
TV shows can be very profitable, even more so than films. But, again, this depends on their viewership. Those with a large enough viewership and/or generate advertising revenue through sponsorship and other means are the most profitable.
However, TV show producers may have to take out loans to finance their project if investors deem it “too risky.” Thus, even though TV shows may bring in good money, the amount made per episode may be impacted by the need to cover loans or pay back investors.
Those shows that become exceedingly popular or continue to generate revenue through reruns are generally the most profitable.
Cost to Create vs. Revenue Stream
One significant factor determining whether a show is profitable is its cost to create vs. the money generated from its revenue streams. TV show projects are often funded through investors or crowdfunding, and while there may be an anticipated viewership, it is difficult to determine how much revenue the show will generate before its release.
Therefore, if a television series does not have high enough viewership numbers or sponsorship deals, it may lose money rather than make any. For every show that is a hit, several others are typically not well-received by audiences and are canceled.
How Do Ratings Affect Earnings?
Ratings significantly affect TV show earnings because they impact the likelihood of more viewers giving the show a try. Ratings refer to how many people watch a show and can be determined through viewership numbers. Ratings also reflect what people think of the show, with internet aggregators like Rotten Tomatoes providing ratings for shows and movies.
Ratings also determine whether or not companies will want to advertise their product during commercial breaks and ad spots, determining how much money a TV show can make from advertising. For example, a highly-rated and popular event like the Super Bowl garners some of the most expensive commercial spots on television.
How Much Money Do TV Shows Make per Viewer?
While TV shows only make a small amount of money per viewer, many shows can attract thousands per episode. The more viewers, the larger the income.
As stated above, general estimates have networks making around $1 per viewer. For example, Game of Thrones, one of the most popular TV shows for years, had 44 million viewers per episode in its final season, which by the metric above generated roughly $44 million per episode.
How Much Money Do TV Shows Make per Episode?
There is no standard amount of money TV show producers are paid per episode, as it varies depending on how many viewers the series has and what sponsorship deals they can get. The more popular a television series, the more money will be made, as evidenced by the Game of the Thrones example above.
Do Movies or TV Shows Make More Money?
While it is difficult to compare the revenue generated between movies and television shows, both media types are typically very profitable. Although there may be more money in film production, popular TV series can also generate significant revenue.
In today’s world of streaming and the rise of brands like Disney, it’s safe to say that both film and television can make huge amounts of money as well as have their share of flops. Several streaming platforms like Hulu have also succeeded by producing their own TV shows and movies.
How Do TV Shows Make Money FAQ
How Does Amazon Prime Video Make Money?
Amazon Prime Video makes money through subscriptions and video-on-demand services. These television series are available to stream on the website, allowing users who pay monthly subscription fees to watch as many shows as they want.
The amount of money that video streaming services like Amazon Prime Video make varies depending on the number of subscribers and how many hours their users watch content. The more viewers a website has, the more income it can generate.
How do Netflix Shows Make Money?
Netflix is an on-demand streaming platform that allows users to access media anytime and anywhere. The company does not produce any content but instead acquires it for distribution to its network of members. For example, House of Cards was a Netflix original series because the movie production house MRC had owned all rights until a deal was made with standard TV network Media Rights Capital.
Check out our related post on how to watch ads for money!
The Bottom Line
Television shows can generate a lot of money, but it depends on how many viewers they have and what sponsorship deals they can get—the more popular the show, the better the advertising revenue.
There are several ways for a television series to make money. These revenue streams include advertising and commercials, subscriptions, sponsorships, and merchandise sales.
Now that you know how TV shows can make money, how do you think your favorite shows are doing?
Samantha Hawrylack is a personal finance expert and full-time entrepreneur with a passion for writing and SEO. She holds a Bachelor’s in Finance and Master’s in Business Administration and previously worked for Vanguard, where she held Series 7 and 63 licenses. Her work has been featured in publications like Grow, MSN, CNBC, Ladders, Rocket Mortgage, Quicken Loans, Clever Girl Finance, Credit Donkey, Crediful, Investing Answers, Well Kept Wallet, AllCards, Mama and Money, and Concreit, among others. She writes in personal finance, real estate, credit, entrepreneurship, credit card, student loan, mortgage, personal loan, insurance, debt management, business, productivity, and career niches.