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  1. 1. Television 2.0The Business of American Television in Transition byTed Magder
  2. 2. Before Reality TVAround 1990s NBC Prime-time Television had afixed point of reference, it was Thursday night.Advertisers were trying to reach audiencebefore the weekend.NBC called Thursday night “Must See TV.”Began with shows like “Friends,” at 8:00 pmand ended at 11:00 pm when “ER” was over.
  3. 3. Before Reality TV This was an entire evening of mix of situation ofcomedies and one-hour of drama. This lasted 15 yearswith programs such as: Cheers Seinfeld Hill Street Blues The Cosby Show
  4. 4. YouTube Video
  5. 5. 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 toreality TV, games shows, and other types of formatprogramming.He wanted to gain popularity on Social networking web-sitesand to Google’s $1.65 billion purchase of YouTube, that samemonth, he called it“NBCU 2.0.”ABC,CBS, and FOX had made similar moves, though withoutthe same public fanfare.Zucker’s announcement for unscripted programs accountedfor 15 hours of prime-time programs a week, by comparison ,the number of prime-time hours devoted to sitcoms wasroughly 10 hours a week, down from 20 hours a week in 2004
  6. 6. 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 thecoveted time slots. What some perceived as a fad hasbecome the norm. Whatever it cultural and social resonance, realityprogramming is now firmly entrenched in the businessmodel of American television, yet another sign that theenterprise of television faces an uncertain future.
  7. 7. Reality TV comes to America
  8. 8. Friends and ERNBC Thursday night line-up increased its prices.Friends costs 5.5 millionER 13 millionMaking it television’s most expensive hour-longdrama and half an hour of network television.Broadcasters: do not necessarily own the programsthey 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 theright to air each show twice over the course of a seasonand to control all advertising placed around them.
  9. 9. Survivor Represents entirely different Model The most obvious differences is that for Survivor, and shows ofits ilk, the on screen “talent” is dirt-cheap. Instead of handing its Producer, Mark Burnett, a license fee todeliver the show, CBS agreed to share Survivor’s advertisingrevenue and asked him to help presell the sponsorship. Burnett secured eight sponsors before the first day of principalphotography, selling most of the 30 second spots around the showas well as prominent brand placements in the show itself. These 8 advertisers, including ANHEUSER-BUSCH, GENERALMOTOR,VISA, FRITO-LAY, REEBOK, and TARGET, paidroughly $ 4 million each for a combination of commercial time,product placement in the show and a website link. Next version ofSurvivor advertisers shelled out close to $ 12 million before theshow went of air.
  10. 10. More to come2005: New showsTHE APPRENTICE (NBC)WIFE SWAPTRADING SPOUSESEXTREME MAKEOVERHOME EDITION (ABC)Almost 20 percent of prime-time program hoursconsisted of reality programming.
  11. 11. YouTube Video
  12. 12. The Business of TV inAmericaSince 1960 TV takes up almost 50 percent of thetime Americans spend with media productsand cultural events.On average each American householdswatches just over 1,600 hours of TV a year, thechallenge for Television’s managers andprogrammers is to grab the attention ofviewers and hold on them for as long aspossible. That attention is sold to advertisers.
  13. 13. TV as a business does what anybusiness tries to do:Is wrong to say that TV in America gives people whatthey most want to watch or that TV responds primarily tothe interests and needs of viewers. Instead in light of thehouse hold habit of TV viewing and the interests ofadvertisers, TV executives try to produce or schedule showsthat are only marginally better than offering available at thesame time. The goal of American TV is to give peopleprogramming that they are willing to watch or at the veryleast, programming from which they will not turn away.From time to time, hits emerge and certain programsdevelop loyal following. But the day to day business of TVdoesn’t run on hits and loyalty. It runs on habit.
  14. 14. The effect of TV depends on Advertising:Grant Tinker, who piloted NBC’s emergence as anetwork power in the mid-1980s once said: “Tele-vision would be wonderful if it were only onWednesday night.”He was referring specifically to the problem of creativity:there are only so many good writers, actors, and othertalented people to go around, while the medium of TVrequires thousands of hours of new program each year.
  15. 15. Once a Program is Finished???The cost of Making extra copies and distributing themis virtually zero. Because most TV programming isserialized, first copy costs are incurred for a number ofepisodes in advance (the creativity deficit would thatmuch greater if TV consisted mostly of one timeprograms) And until the program airs, it is virtuallyimpossible to predict its success--- sunk cost are highand so is the risk of Failure.Richard Caves refers to this Problem as “NobodyKnows” Principle.
  16. 16. How to deal with Nobody KnowsPrinciple?1. Deliver audiences in Buying Mood to advertisers:viewers need to be tuned in but not unduly upset ordisturbed by the program’s content?2. Stick to established program genre and avoidchallenging the genre expectations of viewers.3. Recycle and copy successful show: On television,imitation is the sincerest form of flattery
  17. 17. Reality TV, Formats, and the New Businessof Television. European Producer and TheLure of FormatsReality TV was used to Reduce production cost andFinancial riskReality TV illustrated four significant changes to theproduction side of TVThe growing Enthusiasm for prepackaged formats as a basis forprogram productionThe emergence of product placement or brand integration, as asource of revenue to program producersThe increase tendency to use TV programs as the springboardfor multimedia exploitation of the creative propertyThe growing strength of European program suppliers in theAmerican and international television market.
  18. 18. Follow The Money: Beforeand Beyond The boxThree business strategies that together mayfundamentally alter the logic of TV production.1. Almost every show in the genre demonstrate thegrowing importance of product placement or brandintegration.For example: I Love Lucy one of the most popular showon U.S television was sponsored exclusively by PhilipMorris cigarettes, with a variety of ad campaign builtaround the show star Lucille Ball and Desi Arnaz
  19. 19. Three business strategies2. The search for new revenue is the expansion ofmerchandise tie-ins.For example There are now well over 150 Survivor-themed products that are available in the UnitedStates, everything from CDs and bug spray to boardgames and bandanas.Fear factor has teamed with ice cream manufacturedBaskin-Robbins.
  20. 20. Three business strategies3. The search of new revenue streams is easily themost revolutionary: it extends the “program” beyondthe confines of the box in the living room andencourages audiences to pay to participate in theshow’s dramatic arc or to use other media to stay intouch with the show.Example online voting, texting
  21. 21. On The air, online and On-the-GoReality ProgrammingAttracts young viewerLowers production costs,Offers opportunities for audience to engagement across avariety of platforms,
  22. 22. EndThe networks want to charge advertisers an additional feefor the DVR audience. The advertisers want to knowwhether DVR users were watching the ads at all.But what Nielsen Company refers to as Anytime/anywhereMedia Measurement has reached the point where it is nowpossible to offer data on audience attention during ad breaks.This can be based on who is watching the ads VS. who iswatching the programs.The 2008 television season will be the first to conductbusiness using commercial rating. Television 2.0 may be onits way.
  23. 23. Key Citations“NBC Finalizes Deal to Keep ‘Friends’ for FinalSeason: Cast Will Get Raise”- Joe Flint, Wall StreetJournal online February 28, 2002In 2002, Warner Bros. made last 22 episodes of theseries and received $6 million in license fees fromNBC, which covers about 80% of production costsWarner Bros. owns the show. NBC just aired it.Warner Bros. gets all the income from Internationalsales (Hungary)& syndication in the U.S.
  24. 24. Key Citations“Friends’ Deal Will Pay Each of Its 6 Stars $22Million”-Bill Carter, The New York Times, February12, 2002Considered the biggest deal ever for a 30 min. TVprogram, when NBC and Warner Bros. made deal tobring back 6-person castPaid $1 million each per episodeThat year Friends scored biggest ratings in 5 years.President of NBC Entertainment, Jeff Zucker, said“This is a great day”
  25. 25. YouTube Video