Television 2.0 The Business of American Television in Transition by Ted Magder

Before Reality TV

Around 1990s NBC Prime-time Television had a fixed point of reference, it was Thursday night.

Advertisers were trying to reach audience before the weekend.

NBC called Thursday night “Must See TV.”

Began with shows like “Friends,” at 8:00 pm and ended at 11:00 pm when “ER” was over.

Before Reality TV This was an entire evening of mix of

situation of comedies and one-hour of drama. This lasted 15 years with programs such as:

Cheers Seinfeld Hill Street Blues The Cosby Show

http://www.youtube.com/watch?v=rcc41TitXPs

The Start of Reality TVWhat came next was more surprising…

Zucker announced that NBC would reduce Scripted programs.The first hour of prime time each evening would be devoted to reality TV, games shows, and other types of format programming. He wanted to gain popularity on Social networking web-sites and to Google’s $1.65 billion purchase of YouTube, that same month, he called it“NBCU 2.0.” ABC,CBS, and FOX had made similar moves, though without the same public fanfare. Zucker’s announcement for unscripted programs accounted for 15 hours of prime-time programs a week, by comparison , the number of prime-time hours devoted to sitcoms was roughly 10 hours a week, down from 20 hours a week in 2004

The Start of Reality TV Since the summer of Survivor and Big Brother

in 2000, reality TV, or what is also referred to as “unscripted” programming, has become a television staple in the coveted time slots. What some perceived as a fad has become the norm.

Whatever it cultural and social resonance, reality programming is now firmly entrenched in the business model of American television, yet another sign that the enterprise of television faces an uncertain future.

Reality TV comes to America

Friends and ER

NBC Thursday night line-up increased its prices.Friends costs 5.5 million

ER 13 million Making it television’s most expensive hour-long drama and half an hour of network television.

Broadcasters: do not necessarily own the programs they air, but they get a license from other firms.

In the case of Friends and ER paid a fee to Warner Bros. Television, the show’s producer and owner, for the right to air each show twice over the course of a season and to control all advertising placed around them.

Survivor Represents entirely different Model

The most obvious differences is that for Survivor, and shows of its ilk, the on screen “talent” is dirt-cheap. Instead of handing its Producer, Mark Burnett, a

license fee to deliver the show, CBS agreed to share Survivor’s advertising revenue and asked him to help presell the sponsorship. Burnett secured eight sponsors before the first day of

principal photography, selling most of the 30 second spots around the show as well as prominent brand placements in the show itself.

These 8 advertisers, including ANHEUSER-BUSCH, GENERAL MOTOR,VISA, FRITO-LAY, REEBOK, and TARGET, paid roughly $ 4 million each for a combination of commercial time, product placement in the show and a website link. Next version of Survivor advertisers shelled out close to $ 12 million before the show went of air.

More to come

2005: New showsTHE APPRENTICE (NBC)

WIFE SWAP

TRADING SPOUSES

EXTREME MAKEOVER

HOME EDITION (ABC)Almost 20 percent of prime-time program hours consisted of reality programming.

http://www.youtube.com/watch?v=i5gX689YLXo

The Business of TV in America

Since 1960 TV takes up almost 50 percent of the time Americans spend with media products and cultural events.

On average each American households watches just over 1,600 hours of TV a year, the challenge for Television’s managers and programmers is to grab the attention of viewers and hold on them for as long as possible. That attention is sold to advertisers.

TV as a business does what any business tries to

do: Is wrong to say that TV in America gives people what they most want to watch or that TV responds primarily to the interests and needs of viewers. Instead in light of the house hold habit of TV viewing and the interests of advertisers, TV executives try to produce or schedule shows that are only marginally better than offering available at the same time. The goal of American TV is to give people programming that they are willing to watch or at the very least, programming from which they will not turn away. From time to time, hits emerge and certain programs develop loyal following. But the day to day business of TV doesn’t run on hits and loyalty. It runs on habit.

The effect of TV depends on Advertising:

Grant Tinker, who piloted NBC’s emergence as a network power in the mid-1980s once said: “Tele-vision would be wonderful if it were only on Wednesday night.”

He was referring specifically to the problem of creativity: there are only so many good writers, actors, and other talented people to go around, while the medium of TV requires thousands of hours of new program each year.

Once a Program is Finished???

The cost of Making extra copies and distributing them is virtually zero. Because most TV programming is serialized, first copy costs are incurred for a number of episodes in advance (the creativity deficit would that much greater if TV consisted mostly of one time programs) And until the program airs, it is virtually impossible to predict its success--- sunk cost are high and so is the risk of Failure.

Richard Caves refers to this Problem as “Nobody Knows” Principle.

How to deal with Nobody Knows Principle?

1. Deliver audiences in Buying Mood to advertisers: viewers need to be tuned in but not unduly upset or disturbed by the program’s content?

2. Stick to established program genre and avoid challenging the genre expectations of viewers.

3. Recycle and copy successful show: On television, imitation is the sincerest form of flattery

Reality TV, Formats, and the New Business of Television. European

Producer and The Lure of Formats

Reality TV was used to Reduce production cost and Financial risk

Reality TV illustrated four significant changes to the production side of TV

The growing Enthusiasm for prepackaged formats as a basis for program production

The emergence of product placement or brand integration, as a source of revenue to program producers

The increase tendency to use TV programs as the springboard for multimedia exploitation of the creative property

The growing strength of European program suppliers in the American and international television market.

Follow The Money: Before and Beyond The

box Reality Shows demonstrate the viability of Three business strategies that together may fundamentally alter the logic of TV production.

1. Almost every show in the genre demonstrate the growing importance of product placement or brand integration.

For example: I Love Lucy one of the most popular show on U.S television was sponsored exclusively by Philip Morris cigarettes, with a variety of ad campaign built around the show star Lucille Ball and Desi Arnaz

Three business strategies

2. The search for new revenue is the expansion of merchandise tie-ins.

For example There are now well over 150 Survivor-themed products that are available in the United States, everything from CDs and bug spray to board games and bandanas.

Fear factor has teamed with ice cream manufactured Baskin-Robbins.

Three business strategies

3. The search of new revenue streams is easily the most revolutionary: it extends the “program” beyond the confines of the box in the living room and encourages audiences to pay to participate in the show’s dramatic arc or to use other media to stay in touch with the show.

Example online voting

On The air, online and On-the-Go

Reality Programming

Attracts young viewer

Lowers production costs,

Offers opportunities for audience to engagement across a variety of platforms,

End

The networks want to charge advertisers an additional fee for the DVR audience. The advertisers want to know whether DVR users were watching the ads at all.

But what Nielsen Company refers to as Anytime/anywhere Media Measurement has reached the point where it is now possible to offer data on audience attention during ad breaks.

This can be based on who is watching the ads VS. who is watching the programs.

The 2008 television season will be the first to conduct business using commercial rating. Television 2.0 may be on its way.

Key Citations

“NBC Finalizes Deal to Keep ‘Friends’ for Final Season: Cast Will Get Raise”- Joe Flint, Wall Street Journal online February 28, 2002

In 2002, Warner Bros. made last 22 episodes of the series and received $6 million in license fees from NBC, which covers about 80% of production costs

Warner Bros. owns the show. NBC just aired it. Warner Bros. gets all the income from International sales (Hungary)& syndication in the U.S.

Key Citations“Friends’ Deal Will Pay Each of Its 6 Stars $22 Million”-Bill Carter, The New York Times, February 12, 2002

Considered the biggest deal ever for a 30 min. TV program, when NBC and Warner Bros. made deal to bring back 6-person cast

Paid $1 million each per episode

• That year Friends scored biggest ratings in 5 years. President of NBC Entertainment, Jeff Zucker, said “This is a great day”

http://www.youtube.com/watch?v=vQtveTUZrS8