Understanding TV is very confusing for many people, including many of those who actually work in TV. I know that when I started my entertainment career, I really did not “get” TV. And now it’s even more complicated than ever with the internet & social media.
In the below, I break down TV into 4 categories. Hopefully this macro look at this ecosystem, which is both a primary & secondary platform for content, will make it easier to comprehend.
Network TV: its model revolves around advertising dollars tied to ratings. Network TV production is usually faced with a healthy deficit, with the goal being to recover this deficit from off-network revenues such as DVD sales & syndication. Examples: CBS, NBC, ABC, Fox
Basic Cable TV: its model stems from a dual revenue stream: advertising & carriage fees. Advertising works similarly to the network model above. What’s great about cable though is the second revenue stream in which networks are paid by cable operators to be carried on their system. This is not the time for the “deep dive” on basic cable as that is a post unto itself, but the basic idea is that there is a per-subscriber fee. Because cable is a “1,000 channel universe,” different channels command different per-subscriber fees. Examples: so ESPN or AMC will command more favorable economics than say a more niche-oriented channel.
Premium Cable TV: a.k.a. “Pay TV”: its model is all about subscriber fees. And this business model means that of the 3 types of “TV” we’ve discussed thus far, pay TV is shielded from ratings pressure in a way that the above 2 ecosystems are not. Examples: HBO, Showtime, Starz.
Digital TV: this is a catch-all category that includes everything from Netflix (which is actually very similar to the premium cable model outlined above) to so-called “multi-channel networks” such as Maker Studios which was acquired by Disney. The discussion of digital TV warrants its own series of posts, so I will not go into length here. Examples: the key is that whether you are Netflix, Amazon, Hulu, Maker, YouTube, etc. you are competing for mindshare & thus eyeballs with a host of other platforms for consumers’ time.
I hope that the above at least gives a mental framework so that the TV landscape is easier to comprehend. In the future, we can discuss more details about each of these ecosystems.