Why Bloated TV Networks Keep Making More Shows (Guest Blog)

Blame Tony Soprano and Daenerys Targaryen

hbo game of thrones daenarys

Contributed By LEKGone are the days when only the big networks created original TV content.

Some of the most popular original series don’t air on the major broadcast stations and aren’t on primetime TV. Premium networks (e.g., HBO, Showtime), high-end cable networks (e.g., AMC, FX) and even mid- and low-tier cable networks (e.g., TLC, Bravo) have entered the game, offering exclusive, high-quality, highly entertaining programming.

Networks that once specialized in reality shows have inserted original scripted content into their lineups. For example, “Girlfriends’ Guide to Divorce” debuted on Bravo in late 2014, and E! introduced “The Royals” just months later.

Given the prevalence of the high-quality original content that we enjoy today, it’s no wonder so many critics and fans agree that we are truly in a new golden age of TV. But what spurred so many premium and cable networks to create original content? Two seismic events happened.

The first is an explosion in the number of channels available. In the 1990s and early 2000s, new networks joined cable TV slates, providing consumers with well over 200 channels. These channels then filled their lineups with syndicated reruns of original content created by or for broadcast networks (think “Seinfeld” and “Friends” reruns).

The second major event was the airing of “The Sopranos,” one of HBO’s very first big, high-quality original shows, which premiered in early 1999. HBO has since aired hit after hit (“Game of Thrones,” anyone?), challenging other cable TV networks to create their own original content.

The networks did just that, and content made for cable TV channels got really good — and ultimately spawned an arms race among them. HBO upped the ante with “The Wire” and “Curb Your Enthusiasm” to name a couple, and then Showtime raised it again with “Dexter,” “Homeland” and now the new show “Billions” (which, we must say, is awesome). “Black Sails” on Starz and “Banshee” on Cinemax are other acclaimed series.

Premium networks aren’t the only contenders in this game. Top-tier cable channels such as FX, AMC, TNT, USA and several others all have multiple hit shows. Even lower-tier networks like TLC and Bravo are now airing their own exclusive shows. And let’s not forget Amazon, Netflix and Hulu, all of which produce their own fantastic content — clearly, the proliferation of programming has now extended beyond merely channels.

Networks still air movies and reruns. But these days, your friends don’t ask you whether you caught the Saturday night movie. Instead, they ask whether you saw the most recent episode of “The Walking Dead.” After all, excellent original programming is everywhere.

But the ultimate question is: With so much original content already available, why do networks keep dumping more and more money into it?

As you might have guessed, the answer is economics. Original content that viewers can watch only on a particular channel is incredibly valuable when it is genuinely good. Think about it: “Breaking Bad” and “Mad Men” made AMC a powerhouse for original content. Now AMC commands more money from distributors (e.g., Time Warner Cable, Dish) to carry its channel and from advertisers that want their ads to air during its hit shows.

As much as we enjoy excellent original programming, it’s expensive to produce. And it creates problems for network economics (see table below). Over the next several weeks, we’ll explore a number of these problems in detail.

challenges to the continued proliferation of original content in the traditional ecosystemNext week, we will look at the number of original shows being produced and the shocking cost increases in their production.

This is Part 4 in a series on television trends by Dan Schechter, Gil Moran and Michael Kaufman from L.E.K. Consulting’s Media & Entertainment consulting practice.