Media Wonk

A new script for TV revenues - September 15, 2007

A senior studio executive told me the other day that DVD sales now account for 50% of his company's revenue from scripted (i.e. non-reality) TV shows. Assuming something close to that ratio holds at other studios as well, the scripted TV business has undergone a radical reorientation in a remarkably short period of time.

DVD sales for TV shows barely registered on the P&L as recently as five years ago. Eighty percent of the producers' revenue from TV series came from syndication sales, assuming the first run lasted long enough reach syndication. DVD sales were just a little icing on the cake.

Now, they nearly are the cake.

"It's completely reversed in five years," the exec said.

That reversal sheds some light on the dispute between NBC/Universal and Apple over TV download pricing on iTunes.

As the TV business becomes more like the movie business in terms of revenue streams, the content owner's need to protect the DVD window grows.

Thus, NBC is keen to assert its power to set prices online so it can manage the download market in relation to the DVD market. Apple, of course, wants to be able to manage the download market in relation to the market for iPods, which is a very different thing.

According to Daily Variety, Apple wants to push the price of single-episode downloads to 99 cents, from the current $1.99, arguing that the greater volume of downloads that would result would make up for the lower revenue per download.

For a 23-episode of NBC's hit show Heroes, however, that would put a price on the full-season collection of $23, compared to the $40 NBC currently charges for the DVD boxed set. Even if the lower download price resulted in more gross online revenue to NBC, that revenue is still merely icing on the DVD cake.

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