TV Production Business Model

Goals

Determine the business model of a typical TV show production in the US. The information will be used to better understand the market and the business model to make internal decisions.

Early Findings

TV Production Business Model

  • Based on a 2017 updated report, audio-visual production companies such as TV production firms typically spends on the following: "pre-production costs, artistic production costs, technical production costs, and post-production costs."
  • The pre-production costs typically include the following: "story-line and screenplay preparation, project research and development, feasibility study, and pre-recruitment of technical and artistic resources."
  • As for the artistic production costs, these usually include the director and the cast.
  • For the technical production costs, the following are usually included: "producer fee, editing, crew, extra talent, wardrobe, set, location, transportation, music, publicity, fringes, insurance, and equipment."
  • With regard to the post-production costs, film and lab editing expenses are typically included.
  • From an economic perspective, audio-visual solutions are classified as "experience goods."
  • From an accounting perspective, these products are part of "intangible assets."
  • The potential of TV audio-visual products to earn revenues will also be dependent on the willingness of the audience to pay for the possibility of viewing the product.
  • This can then convert them from potential to actual paying viewers.
  • The higher this conversion can happen, the bigger the earnings of these TV shows.
  • The ratings of TV shows also impact the revenue of the producers.
  • The rising demand for TV shows and the "evolution of distribution platforms from increased internet" are the factors that are propelling the earnings of the sector.
  • Technological innovations are also expected to enhance customer interest and engagement.
  • Revenues are linked to the potential of bringing in more paying viewers on several "markets of exploitation."
  • Some of these markets include the following: "theatrical, home video, Pay TV, PPV, free TV, new media, ancillary, and derivatives, and foreign markets."
  • Revenue sources of TV production companies typically come from the following: "advertising revenues, subscription by viewers, fee paid by viewers and public funds, private broadcasters, and public broadcasters.

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