How do game shows make money?, girlsplained
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I don't know about you, but whenever I watch a game show on television I wonder how they make and give away that much money.
Those who know me are probably aware of my obsession with game shows. Naturally, understanding their business models has always been intriguing to me.
First things first, what is a game show?
According to the Internet, they are shows that offer mortals like us the opportunity to appear on television, have fun playing a game and earn money doing it.
If you ask me, I think they are the best invention in our galaxy.
Among the most famous are: The Wheel of Fortune; Jeopardy; The Price is Right; Who Wants to Be a Millionaire?; Family Feud; Are You Smarter Than a 5th Grader?.
How do these shows make money?
There is little to none official information on this topic. However, I was able to discover that these types of programs make money in 4 different ways - not mutually exclusive -:
With advertisement: Most television shows make money because big brands are willing to pay large sums of money to appear on them. Depending on the show’s success, the cost of the ad can be more or less expensive. Brands often donate many of the gifts that are raffled off in these contests.
For example, it is very common for The Wheel of Fortune to give away trips (in the USA) or technological devices (in Spain). Those products are mostly donated by the brands. Meaning, they cost 0 dollars for the producers.
Also, some brands pay just to be named. For example, in Jeopardy, it was very common to see one of the categories named after a brand.
Syndications: It is very common, especially in the United States, that syndicates own these types of programs. This means, no private network owns them and doesn’t have exclusivity (mostly with re-runs). They could air the same show in different places, guaranteeing a greater number of viewers, and therefore, more money.
An example of these shows are Jeopardy, The Price is Right; The Wheel of Fortune, Family Feud.
Many game shows are a franchise. Producers pay a price to use the license in each of their countries.
Using insurance companies: Another way to ensure the payment of prizes is with insurance. This indicates these types of programs pay a monthly fee so that the day someone wins the jackpot, it is paid by this company.
This is especially common in programs with million-dollar prizes. There is a famous story from the show “The Price is Right.” Many years ago, in a special edition season of six shows, 3 people won the prize of USD 1,000,000. What made the insurer change the contract and also pushed to change the rules of the game.
Making “pots": Especially games with higher complexity levels and lower chances of winning, networks build a “pot” by daily adding a certain amount of money into an increasing “pot”. Which makes the cost of production relatively low.
Are these programs profitable?
Very. Unlike TV series or other types of audiovisual content, game shows can be recorded in a studio without the cost of editing, equipment, special effects, or actors. Usually, networks record several episodes a day, working only a few days a week. This allows the network or syndicate to divide the costs of the production with other programs.
There is a study from the year 1988 when game shows were at their peak, it shares the cost of broadcasting a game like Jeopardy and its annual earnings.
“Jeopardy! has an annual production budget of an estimated $5 million (with close to half of that allocated for prizes) compared with around $20 million for a half-hour prime-time network show. Industry analyst Liz Baron of Baylis, Zorn, Gerard Inc. estimates that revenues for “Jeopardy!” last year were close to $50 million.”
We can assume that the expense-earnings ratio remains similar. Even when the costs are definitely higher. Therefore, we can say these types of shows continue to be quite attractive economically.
Also, some people claim that when big prizes are involved, some producers come to an agreement with the participants on how to pay them. For example, “If you win $1 mil on a show, they might tell you (after the show is done taping) "okay! we can give you $50,000 a year for the next 20 years, or we can pay you $450,000 lump-sum right now and that's all you get."
Taxes are another fine print in this matter. It is very likely that if a person wins a car in one of these programs, they’ll have to pay taxes in order to use it. So they may end up paying much more than what they won in the game (in the case of prizes).
Nevertheless, these games are not only extremely profitable but fun.
My favorites:
As I mentioned at the beginning, one of my greatest joys is coming home to one of these game shows and playing alongside the contestants. These are my favorites (in no specific order):
Pasapalabra, the Argentine one. Watch it on YouTube.
Jeopardy. This is one of the most famous, oldest, and most difficult game shows. You can see some episodes on Netflix.
The Wheel of Fortune, the Spanish one. There’s an American one on Netflix, but I find this one to be more entertaining. It’s on YouTube.
Look at all the things you learned today:
Game shows are the best invention on the planet.
These programs earn money with advertisements, syndicates, insurance companies, or by making a pot.
Many programs have franchises in different countries.
The contest programs are extremely profitable because the production costs are very low.
My favorite shows are Pasapalabra, Jeopardy, and The Wheel of Fortune.
Thanks for reading. I hope you learned something. If so, please recommend it, leave a comment if you want me to explain any particular topic, or buy me a beer if you truly enjoyed it.
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