How Many Scripted Series Can the TV Biz — and Viewers — Handle?

Gluttony of Television
Diego Patino for Variety

As a new television season begins this month, even the most devoted couch potatoes may be overwhelmed by the deluge of new and returning series premieres that will unspool over the next year. And they’re not the only ones.

Industry executives are quietly starting to use the B-word — “bubble” — in surveying the landscape of scripted skeins across the dozens of broadcast, cable and digital outlets that are serving up original programming. That growth has been fueled by the windfall of licensing revenue from expanding international sales and digital platforms that barely existed a decade ago.

But after a more than 1,000% spike since 1999 in the number of scripted series produced for just pay and basic cable, there are growing concerns, even among those in the production world, about the unwelcome consequences of so much capital chasing talent, viewers and, most important, off-network profits.

At a time when every aspect of the traditional television business is in the throes of transition, some see big losses and a decrease in volume as inevitable, and soon. According to Variety research, broadcast and cable networks this year have aired 145 scripted original primetime series and miniseries, a 14% increase over the same frame in 2013. At least 350 new and returning scripted series have been ordered for the 2014-15 television cycle (including summer 2015), and that’s not including digital outlets. The long-tail theory may not be long enough to support this exponential boom in high-end production.

“Everybody is enjoying Netflix’s emergence as a buyer of all this scripted content, but what we worry about here is supply and demand,” said Michael Nathanson, a veteran media biz analyst and partner in the research firm MoffettNathanson. “The supply of dramas is increasing to the point where in the coming years, there are just going to be too many shows.”

Illustration by Justin Metz for Variety

FX Networks chief John Landgraf sees the expansion as a symptom of the audience fragmentation that’s been a fact of life for programmers for decades. He noted the number of scripted series on broadcast TV is actually down about 15% from its peak in the early 2000s — with lower-cost, unscripted shows making up the difference — and he sees a similar scenario on the horizon for pay and basic cable.

“The question is when does the fragmentation become so great that the ability to sustain and nurture these programs from a financial perspective become compromised,” Landgraf said. “We’re probably getting real close to the end of the growth curve for premium and basic cable right now.”

Industry veterans said that the biggest issues resulting from the gusher of production include:

» A significant spike in the cost of securing top talent and sought-after source material, from hot scripts to life rights to existing books and movies.
» Rising prices for crews, equipment, stages and locations, among other necessary ingredients for production.
» Higher demand for promotional time coupled with declining ratings for linear channels, making marketing campaigns more costly and less effective.
» Top cable nets cutting back on off-network buys because of increased commitments to original programming.
» Netflix gaining outsized influence due to its growing clout as an off-net buyer.

The skyrocketing number of scripted series flooding the airwaves has, of course, coincided with an equally dramatic shift in the way people that watch TV. Time-shifted viewing patterns are becoming the norm, and that in turn is having a huge impact on how producers make money on content, from the first exhibition window to long-term library value.

The world’s biggest media congloms are more invested in television programming than ever before, because cable networks and content-licensing are the main profit drivers for Disney, 21st Century Fox, Comcast, Time Warner and CBS Corp. But even the biggest players are facing the how-much-is-too-much question, and adjusting to new financial realities.

“We’re in an evolving ecosystem,” said NBCUniversal Cable Entertainment Studio president and chief content officer Jeff Wachtel. “There will be some version of a winnowing where the business says, ‘Let the strong survive.’ But it’s also about recalibrating our expectations as viewing patterns shift.”

SEE ALSO: Comcast CEO Roberts Wants NBCU Cable to Produce ‘Breaking Bad’-Size Hit

The focus on content production is reflected by recent exec moves at the majors, from Wachtel’s appointment last year to rev up NBCUniversal’s cable studio to feed its inhouse channels as well as non-NBCU outlets, to the restructuring in July that put Fox Broadcasting’s programming operations under the guidance of 20th Century Fox TV studio chiefs Dana Walden and Gary Newman.

Elsewhere on the Fox lot, FX Networks has stepped up activity at FX Prods. now that it has to feed two general-entertainment nets (FX and FXX). Having greater control over more of its programming gives it the ability to profit from content licensing well beyond FX Networks’ walls, and lets the cabler afford more shows.

“If your business strategy is predicated on having hits and hits alone, it’s going to be very fragile,” Landgraf said. “We started FX Prods. because we couldn’t figure out how to pay for as many shows as we wanted. We chose to build a (financial) plan based on what was achievable for us through content ownership.”

The glut of programming has helped drive consumers’ embrace of the time-shifting options that are challenging traditional ad-supported network business models. Sunday night, even in the summer months, is a war zone of competing prestige series that taxes the DVR storage ability in many homes.

With every new show, the dependence on time-shifted viewing for ratings points grows for all but the biggest hits. As more viewers embrace binge-viewing — waiting to watch multiple episodes in one sitting — measurement and monetization questions become even more muddied.

“It’s as if you had a retail store that used to be open in one location from 9 to 5, and now there’s one on every corner that is open 24 hours a day,” said CBS Corp. chief research officer David Poltrack. “With greater access to all programming, it’s no surprise that it’s the hit network shows that gain the most. With so much time-shifted viewing going to the (broadcast) networks, the question for cable becomes, at what point does the return on investment in developing and launching new programming become challenged?”

To some, the current moment in TV echoes the era of irrational exuberance on Wall Street. Venture capital and private equity have been flowing into TV in the form of independent production entities such as Media Rights Capital, which made its mark with Net­flix’s “House of Cards”; and Georgeville, with backing from India’s Reliance.

“It sometimes feels like the Internet bubble in the early 2000s. You had a jillion startups and lots of money pouring in,” said a veteran production exec. “The bubble burst because there was massive failure. Some version of that will occur here. Some of the smaller outlets taking big shots will not be able to keep investing at this level.”

Call it the AMC effect. The dawn of “Mad Men” in 2007 quickly transformed the cabler from a second-tier movie channel to an Emmy-winning contender that saw its market value more than triple because of its targeted investment in original scripted series.

The same strategy had worked for FX with “The Shield” a few years earlier, but AMC’s metamorphosis was more surprising because of its relative lack of resources compared with FX and what was then News Corp.

Today, channels across the listings grid — from CMT and E! to WGN America and We TV — are looking for that same bounce by fielding what they hope will become signature series.

Netflix’s bold entry into the same territory has been nothing short of a stimulus for the creative community. The netcaster’s big upfront commitments, starting with its two-season order for “House of Cards” in 2012, and HBO-sized budgets, have upped the ante for all top-tier networks. Hulu and Amazon Prime to date haven’t been as free-spending on originals, but they are still factors in the marketplace, as is Yahoo.

There’s so much competition now that the broadcast networks, which used to be the first stop for creative talent, struggle during pilot season to find seasoned writers, directors and producers who aren’t tied up on existing shows.

The hunt for talent has driven up prices, particularly for experienced showrunners and established actors. Showrunners who were making $30,000-$35,000 an episode after the cutbacks that followed the 2007 writers strike and 2009 economic crisis are in many cases now able to command $50,000-$60,000 per episode, along with rich overall deals. Below-the-line costs and equipment rentals have seen a similar spike, especially in states that have become production magnets because of tax incentives: New York, Louisiana, North Carolina, New Mexico and Georgia.

Execs note that in the past two years, the traditional discount in salaries for creative talent working on cable shows vs. broadcast has essentially disappeared. “If you want anything good, you have to pay for it,” said one seasoned exec. “The talent agency community has been very effective at equalizing rates among media.”

The rising costs of content production are all the more sensitive considering the surplus of shows has likely contributed to a thinning of margins from TV advertising revenue. The more the audience fragments, the more linear ratings erode. Stemming this shortfall has meant an increasing dependence on after-market licensing for profitability, which in turn has given considerable leverage to deep-pocketed Netflix as the rest of the syndication marketplace shrinks.

Studios traditionally made their money from syndication sales rather than the firstrun license fee, but SVOD and international sales have become the linchpin. With the right properties, execs boast that shows can now be in the black from day one, thanks to a patchwork quilt of premium network license fees, worldwide and SVOD sales.

Netflix demonstrated the industry’s new economics in a pact that jolted the programming marketplace earlier this month, locking up rights to Warner Bros. TV’s Fox drama “Gotham” beginning in 2015 for at least $1.75 million per episode. The deal was significant for two reasons: It came weeks before the show’s network premiere, and it included all of Netflix’s worldwide territories.

Such all-encompassing pacts for rights in all markets served by an SVOD platform are becoming the norm, industry vets say — and these deals chip away at the studio’s ability to sell a show to the highest bidder in every overseas market.

Netflix has used its market clout to deter content owners from making all current-season episodes of a show available via ad-supported streaming or VOD platforms by letting it be known that it will pay less for shows that have had such broad exposure. Fox will be able to offer only five episodes of “Gotham” at a time via on-demand platforms, which is a standard template for Warner Bros. and other studios to maximize a show’s after-market value. The restriction has led to tensions between studios and networks over so-called stacking rights as networks look to enhance their own VOD offerings.

“The ‘Gotham’ SVOD announcement made us once again stop and think about Netflix’s ever-increasing hegemony, and the proper balance between the now and the future for global media content and distribution companies,” Rich Greenfield, media analyst for BTIG Research, wrote in a Sept. 4 blog post. “We have continually questioned media companies’ strategy in ‘taking the check’ enabling a new video powerhouse that could ultimately undo the current video ecosystem vs. building their own direct-to-consumer business.”

What also worries observers like Nathanson is how much shows that don’t have the sizzle of a “Gotham” might lose amid the flood of product. In the fourth quarter of 2013, AMC Networks took a bigger-than-expected writedown of $52 million on two canceled shows: “Low Winter Sun” and “The Killing” (the latter was resurrected for a final-season run on Netflix this year). Between production costs and marketing expenditures, cable programming is becoming as pricey as broadcast fare to produce.

“People like to say ‘content is king,’ ” Nathanson said. “I say ‘great content is king.’ And there’s just not that much great content out there.”

Perhaps the biggest challenge facing TV’s creative community overall is the need to adapt to new ways of doing business and new definitions of success. In an on-demand environment, networks need to think as much about how they serve as curators of content as they do about investing in “watch tonight!” ballyhoo; and studios need to find better means of measuring the “stickiness” of shows beyond Nielsen ratings.

“Our business is evolving from a pure home run business to one that focuses on what succeeds on (different) platforms,” said NBCU’s Wachtel.

Landgraf echoed that sentiment, and noted that the staggering level of engagement viewers now have with favorite programs is a big reason why networks small and large want a bigger menu of original series.

“I see this cresting wave and all of these challenges, and yet people’s love of the content has never been greater,” he said. “I see various forces driving the total number of series probably beyond what could be sustained in the long run. But I don’t see a cliff.”

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  1. “More than 145 original scripted series and miniseries aired in 2014,1 a 14 percent increase over 2013 and a crazy-making 1,000 percent jump from where we were 15 years ago. ”

    Is that supposed to mean total shows on the air, or shows which debuted in 2014? If it’s total shows, that seems grotesquely low, and it means that there were only 14 or 15 in 1999.

    “At least 350 new and returning scripted series have been ordered for the 2014-15 television cycle (including summer 2015), and that’s not including digital outlets.”

    Even that is too few if there are ten times as many as there were in 1999. There had to be between 60-100 shows on the air (3 networks, 3 hours, 7 nights, plus many half-hour shows) even in the pre-cable days (and before Fox etc.).

  2. terryzxz says:

    If people were NOT so obsessed on seeing a new movie on opening day, then the money market would decline and make things slightly more reasonable to see or buy. I go the very few movies now and none on their opening. In fact the only ones I even bother to see at the theater anymore are the IMAX 3D and only because it beats my home theater experience by a long shot. But even then I got on discount days. I also find that is more enjoyable as there are far less jerks there who keep yelling out and talking through the entire movie and that just ruins it for me.

  3. Tony Folden says:

    Reblogged this on The Dialogue Architect and commented:
    Looks like a great time to be a television writer!

  4. Garret says:

    Reblogged this on KITSCH KING and commented:
    Brilliant write-up on the backside of success in relation to [cable] TV’s current creative boon and industry production epoch. I agree that the TV glut is both a phenomenon to behold and a growing problematic. I’ve suggested the “global temporialism” in a couple of upcoming publications and will address the issue more with the Media Ecology Division during November’s National Communication Association 100th Annual Convention in Chicago. On the one hand, there is a venerability of rich and engaging textuality under development and in continuation on cable. Yet the overwhelming content glut creates a current that drowns audiences in their own pleasures. I personally had to abandon multiple promising cable dramas this summer under the stress of DVR storage limitations and the encroachment of ‘TV everything’ on everyday life. To be sure, this is a new and compelling phenomenon that researchers in a variety of fields should address with urgency from manifold perspectives.

  5. Joe says:

    Most of these shows are crap anyway, and will be forgotten as soon as they leave the air?

    Who remembers NYPD BLue or Saint Elsewhere?

  6. Arnie says:

    To Jedi77, below:

    Please forgive typos. But I have to run in a few minutes.

    I’m afraid not. You engage in logical fallacy.

    You assume that everyone must look at everything.

    Also, that everything of quality is of equal value.

    The entertainment jungle’s much more Darwinian than that.

    All quality shows are not, that’s NOT created equally.

    Moreover, all quality shows are not of the same genre.

    If your boss just tore you a new one, chances are you do not need a Norwegian murder mystery to lift your spirits, no matter how good the show is.

    You need something bright, airy, sweet . . . hence the popularity of, say, “Mary Tyler Moore”.

    Conversely if all in your day is tickety-boo, say, your wife is not shedding her wedding ring after a family-brawl in Alaska, maybe you could stand something darker, more Norwegian.

    Light reality often begets a trip to the darkside of visual fiction and vice versa, quality not withstanding.

    But real quality is so so rare (see my entry below), that too much of a good thing is not even an issue.

    As long as the rampant inbreeding continues in production, as long as true talent is suppressed by know-nothings, we’ll be debating our fantasies, our wishes, not our reality, as it relates to quality.

    Compare “Partners” to “Frasier” or even the less-than-“Frasier” “Martin.”

    “Partners” is a disgrace, a distant 3rd.

    Fact : Incest, ie H’wood cloistering, will never be best for the audience. (Unless your name happened to be Warren in the 1950s.).

    It’s like black women explaing away their ampleness with “My man likes me thick.” Well, gee, if that’s his only option, I guess it’s thick or nothing. So thick wins every time. And the fast-food self-indulgence is justified, a vicious circle completed. And fries are supersized.

    Clumsy analogy, but the wordplay works bigtime, in that most production these days is beyond thick. With only the rare skinny girl, eg Sarah, Larry and T-Bag (Tina). (Again, see below.)

    Cheers mate,
    Arnie Tracey

  7. Ellen says:

    We are not now, and have never been at any time, “drowning in good TV.” Sturgeon’s Law still applies. Ninety percent of everything really IS crap, or perhaps more accurately, only 10 percent is REALLY outstanding. I mean, there are people out there who actually believe WGN’s “Salem” is “an excellent show,” just another example of this Golden TV Age We Live In.

    Look more carefully and you’ll see a curious lifelessness and cookie-cutter sameness beneath the fantastic production values and big star names. For example, a lot of “quality TV” these days depends on what was memorably written about recently as “Gonzo Television” which means that everything rides on “shocking twists” that usually involve random violence, or antisocial characters just simply acting like trainwrecks. That has gotten beyond old, but TV critics lap it up because it’s all they’re served.

    What of today’s “Golden Age” TV will people still be watching with affection 10, 20, 30 years from now? Very little, I’d suspect. Same as it ever was.

  8. rastamouse says:

    This is a really great article. Keep up the good work, Cynthia.

  9. jedi77 says:

    A very interesting article. Thank you.

    @Arnie: And of course quantity is a problem. There are only so many viewers, only so many hours in the day, and, eventually, then only that many eyeballs to go around.

    That means that even good shows will suffer, because of normal drainage. Same as the Box Office. A glut of tentpoles erodes eachothers profits, no matter how good they are. Whereas two good tentpoles, 4 or 6 weeks apart will nuture eachother and inflate profits.

    If people can only cope with watching, say, 5 shows, but there are 8 actually good shows out there, 3 of them will suffer. And planned bingewatching of the 3 remaining shows won’t help anyone, because while you planned binging them, they got cancelled because of poor ratings.
    That is a problem!

  10. Arnie says:

    Corrections: I decided, since there are only to edit my earlier post.
    n.b. “tiny” is deliberate, Tina, Lorne.

    As long as there is quality, there will be eyeballs, no matter the quantity. The “real” problem is that the gates of production are locked, the creative connections are nothing, if not incestuous, the bulk of suits lack integrity. Moreover, with few exceptions, suits lack “any,” that’s ANY, artistic aesthetic worthy of their sitting in judgement of artists. Artists, no matter how completely they’ve sold out. .

    So production does, indeed, have a major issue. But it sure ain’t quantity. Or tech platforms.

    As long as the production/creative community remains falsely gated, a veritable castle, altogether unbreachable, then not unlike brothers and sisters who mate, the outcomes will be insipid, tepid, vacuous, risible, and absurdist.

    We’ll have to rely on “renegades” tap dancing on either side of known third-rails, e.g. sex for Sarah Silverman (puthay, anyone?)., propriety, both social (does size matter to Vivica?) and religious (splashing J.C.) for Larry David., race (like a broken record, pick an episode) for tiny Fey.

    Even my fave, “Breaking Bad,” manifests too heavy a reliance on beauty photography, crisp editing, and unbelievable acting, not to mention cashing in on the universal impotence of the majority male in our land which impotence was twice amplified by Obama’s elections.

    But it still rated “Bad” high due to . . . the synergy of everything.I mean EVERYTHING.

    To the brothers (and their sisters) in production I say, bring quality. By the boatload. Bring it. But do cut the Exxon Valdez tanker full of crap.We’re drowning over here!

    There. How’s that for a polish, suits?

    Arnie Tracey
    Ottawa Ontario Canada & Washington, D.C.USA

  11. Bill says:

    It’s actually funny; I find myself watching less TV than ever due to the increasing reliance upon reality programming and general garbage.

    Big Bang Theory, The Middle, NCIS and Last Man Standing are about all on the weekly schedule with Boardwalk Empire DVRed for binge viewing.

    At least until the final season of Mad Men and Fox does another run of 24.

    Never watched Breaking Bad, as no matter how good it is as TV, I don’t want to watch a drug dealer destroy the lives of others with their product.

  12. Arnie says:

    As long as there is quality, there will be eyeballs, no matter the quantity. The real problem is that the gates are locked, the connections incestuous, suits lacking integrity, suits lack any aesthetic worthy of sitting in judgement.

    So production has an issue. But it ain’t quantity.

    As long as the community remains gated, a castle, unbreachable, then not unlike brothers and sisters mating, the outcomes will be tepid, vacuous, absurdist. Relying on tap dancing on either side of third rails, e.g. sex for Sarah S., propriety, both social and religious for Larry D., race for tiny Fey.

    Even my fave, “Breaking Bad,” manifests a too heavy reliance beauty photography, editing, and acting, not to mention cashing in on the impotence of the majority male, amplified by Obama’s elections.But it still rated high due to . . . everything.

    I say, bring the quality by the boatloah. and cut the Exxon Valdez of viewer swamping crap.

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