Even though TV seems to be America’s favorite past time, a large portion of U.S. studios’ revenue for their television shows actually comes from abroad.
For a typical hit TV drama show, up to 41% of the revenue could come from international licensing, with just 34% coming from U.S. broadcast licensing, 17% for syndications/reruns and 8% from subscription video on demand.
The effect of international audiences, deals. With so much of a television’s potential revenue involved in overseas’ audiences, U.S. studios spend a lot of time courting and making deals with executives from foreign television stations. Putting a focus on international markets is essential as the domestic business is slowing down for studios and media buyers as well. Selling shows overseas is also helping to offset the growing creative costs associated with top shows.
For example, contracting talent for shows is getting more costly as cable channels and streaming TV providers are getting into the production game. In the past five years, the costs for a typical one hour drama have increased by as much as 50% to over $3 million per episode.
Studios need to foot part of the bill. Warner Brothers and other studios pay to produce shows and then license that content to NBC, ABC and other networks. However, these networks can’t cover the entirety of the production costs. Networks can cover between half or two-thirds of the costs, which leaves studios needing to cover the gap with other options. International audiences are a near ideal option to make shows profitable.
Movie studios are doing the same thing as well, and some studios have begun to deliberately cater to foreign markets. Both recent installments of the “Transformers” and “The Expendables” franchises used Chinese actors and had scenes filmed in Beijing. To date, the TV studios simply have not catered to foreign audiences at such a level, but most shows they are selling have a broad appeal and excellent production quality that viewers on both sides of the ocean certainly appreciate.