I teach the business of animation at several colleges and universities. Over the years I found that students need to really know where the money comes from to support their creative endeavors, freelance projects, TV shows and even feature films they want to eventually work on. The first question I ask the class is “Where does the money come from?” and the answers are interesting. “Investors” is one of the first, and then “corporations” is another. But when we start looking at the anatomy of where the money comes from, it is far more complicated then these two sources.
When I say “advertising” is one of the sources for money, that rings a bell for them. In some ways, almost all commercial animation (not referring to advertising but to consumer content) does start with advertising. But do we really understand the mechanics of this revenue stream?
For television, money eventually comes from ad sales. Advertising is what the acquisition executives, programming executives and development executives look toward when making a decision on content. Will the show attract viewers? Will the viewers stick with the show to view the advertising? Commercials create the revenue that sets the “licensing fee” for each show.
Every spring the LA Screenings come to town. The networks scramble to woo each of the advertising buyers for pre-sales of their shows. This is not just for prime time, which has the biggest revenues, it is also for kid-friendly shows and other network day parts. The more advertisers interested in the content the better the ad sales and the pricing for the ads can rise with the impending interest.
Now it is the networks responsibility to promote the shows to get the audience, so the advertisers are getting the specific audience that was promised in the numbers that make financial sense to them. With the right audience numbers, know as ratings, the networks can then pay higher price for each show, or a licensing fee.
But this is not the only channel for money. More on this next post.