Three Ways to Make Money
I’ve worked in different kinds of television animation for my entire career. As a result, I’ve become something of a student of the television business. This is especially true since I’ve tried selling shows.
This is the first part of a series explaining how the TV business works. The economics affect what shows get on the air. For those of us who work in the business, it affects the jobs that are available.
Companies have to sell a product or service to make money. What does a TV channel sell? If the channel has any advertising on it, what it’s selling is the viewer: you. By tuning in, you are adding yourself to the crowd watching that channel and the channel turns around and sells the crowd to advertisers. This used to be a channel’s sole income.
This is nothing more than a high tech version of the travelling medicine show. In the 19th century, a horse drawn wagon would move from town to town. A singer or banjo player would stand on the back of the wagon and draw a crowd. Once the crowd was large enough, it was time for old Doc Potter to come out and sell his snake oil. Only one dollar a bottle; good for what ails you. In modern terms, TV programming is the banjo player. The crowd never pays for the banjo player directly; it pays indirectly when it buys snake oil.
Since the start of cable television, there are subscription fees. Some channels receive a portion of their money from your cable bill and still run commercials for additional income. Other channels exist solely by subscription. That’s the only case where TV programs are actually the products, as the customers are paying for them directly.
The final money stream is merchandising. It might be as basic as selling the show on DVD or it might mean creating completely new merchandise around a show: toys, lunchboxes, comic books, etc. Animation is a natural fit for merchandising.
No matter what the money stream, the object is to draw the biggest crowd possible. More people lead to more sales. Here, we’re faced with an important paradox. The number of channels has grown proportionally faster than the number of people watching. While we all have greater choice as to what we watch, each individual channel actually has fewer viewers. Every new channel that shows up on your TV makes the problem worse.
Next: Multinationals and how they deal with the paradox.