Television facts of the day

There were 496 scripted TV shows made in the US last year, more than double the 216 series released in 2010. In the past eight years the number of shows grew by 129 per cent, while the US population rose only 6 per cent. The trend is set to deepen, as groups like AT&T’s WarnerMedia commission dozens of new series to convince people to sign up for their streaming services.

…In the span of about six months, Disney, Apple, AT&T and Comcast are launching new streaming services, asking people to pay nothing for some services or up to $15 a month to watch their libraries of films and shows.

Here is more from Anna Nicolaou and Alex Barker at the FT.  Yes, you might be tempted to short this sector and perhaps I am too.  Still, another possible part of the equilibrium adjustment is simply that the market swallows the content and factor prices fall, a’la music streaming.  That would be one way to get all of those costly special effects out of so many movies.

Comments

Fifteen US dollars a month? For something I might make use of for 2 hours a month? Forget it! Who has time to watch TV these days? Now excuse me while I go spend the next 4 hours building the perfect lesbian love shack for Piper in Fallout 4.

Speaking of video games, for the Royal Game, I was tempted to buy Fat Fritz until I found you need a fast graphics card (!) to run its parallel processing chess engine. A graphics card actually feeds the uP information needed for peak performance, and this is in a board game! I don't have a fast graphics cards, in fact I use integrated graphics in all my machines except one and I even code (working on a program to prove the fallacy of diversification as once posted by AlexT now). No time for TV either.

The processors in a modern graphics card are nothing more than massively parallel vector processors. They are used all over the place for machine learning: calculating partial derivatives works just as well as calculating the color of a pixel. For many use cases that are massively parallel, a video card destroys a modern desktop CPU. So it’s no surprise chess engines, even traditional ones withou ML, are trying to squeeze more performance by running on video card processors. Even flagship phones now have processors built in for efficien machine learning, which happen to be very similar to video card processors.

So get on with the times and buy a card. They have lots of patents after all.

"Now excuse me while I go spend the next 4 hours building the perfect lesbian love shack for Piper in Fallout 4."

You're definitely going to need a few mods to build anything well in Fallout 4.

Challenge accepted. I wasn’t going to purchase Fallout 4 but Crikey sold me.

I was going to suggest you get something better, but yesterday Piper and I spent the afternoon shooting rockets at stray dogs in a wasteland, and so there is nothing that really captures the Australian dating experience better.

Just try to avoid the "main plot". The writing is atrocious.

If you want to see what I mean about "wasteland" here is what New South Wales currently looks like:

https://www.facebook.com/abcinsydney/photos/a.10150665080239015/10157994336389015/?type=3&theater

It's a great game, but if you are going to start seriously building anything get some of the building Mods. The basic building structure is a cool idea but the implementation was flawed. However, Fallout 4 has many excellent Mods that make building much less tedious and error prone.

Good advice, but I just watched a video that explains how to actually use the existing build tools in the vanilla game and it has made the limited amount of building I'm likely to want to do before I get bored a lot easier.

This experience has rubbed in is how dumb interfaces often are these days, in that it won't teach me there are better ways to do things even when I think it should be obvious that it should offer some help or advice after I've done things inefficiently a dozen times in a row.

Maybe the developers are just lazy because they assume we'll all check youtube?

Isn't this just a shift back to an advertising-based model? Where content brings you in so you end up buying something else? Before it was whoever paid for ads, now it's either Apple products, Comcast services, Disney merchandise/tickets, or pretty much anything on Amazon.

The mega-advertiser controls the content, and all other advertisers shift to Facebook and Google (except for those selling Life Alert to senior citizens uninterested in learning how to using a streaming service, or maybe just uninterested in spending mental effort deciding what they want to watch).

Netflix had better figure out what they want to sell besides content, because everyone else is going to subsidize access to it as marketing for their product/service ecosystem. The Stranger Things pool floaties I saw at Walmart are probably not going to keep them afloat against Disney.

"Netflix had better figure out what they want to sell besides content, because everyone else is going to subsidize access to it as marketing for their product/service ecosystem. The Stranger Things pool floaties I saw at Walmart are probably not going to keep them afloat against Disney."

People will get more than one service. There's room for Netflix, Disney, Hulu and maybe AppleTV or YouTube as major players, but beyond that it starts looking a little stretched. There will be a fallout, it might topple Netflix, but it's more likely that a lot of the new bit players will never get off the ground.

Netflix is one of the things that Amazon offers on its Prime Video service. And FWIW, I see ads for Amazon Prime Video on Amazon, not ads for Amazon on Prime Video.

Paywalled. More and more of your links are to paywalled sites TC. It's probably not you, but the monetization of the content, but still it is off-putting. Only reason I tried the link was to determine whether "TV shows" meant episodes or a single series. I'd make a wild guess that it's the former. I wonder if you call an episode a show? But with the trends away from Reality TV (I hope) and towards streaming (i.e. new technology) to me it seems comparing 2010 to 2018 is apples and oranges.

Nope, it's number of individual series (which usually contain 10-24 episodes each). It's a huge quantity of TV, being produced far faster than any person can hope to consume.

No. Cable and streaming are a third to half the number of episodes. The amount of traditional scripted shows on the networks is probably the same as before or slightly lower. More"reality" during the main season with a few more originals in the summer.

I suspect US demand is only part of the story. US TV series were only a fraction as relevant in Europe ten years ago as they are today. Netflix has a global audience and the other streaming services want to get in on it too.

Ah, the good old days when I used to get questions about "Dallas" when traveling overseas (OK Boomer). I stopped owning a TV in the late 1990s, and now I only bought big screen TVs for my numerous relations in the PH, where US sports are big. I do watch chess live on the internet however.

Bonus trivia: they cut out commercials and missed shots when replaying NBA games in PH, so it seems the players are superhuman.

My wife is Turkish and throughout our travels in Morocco, Egypt, Bosnia, and Croatia people have told us they watch Turkish tv shows.

So what? Millions of human beings all around the world watch Brazilian soap operas, which are considered the best in the world (although I haven't watched one of them since the early 90's), yet I don't brag about as if I had invented television.

Everyone knows that President for Life Bolsonaro invented television.
But what is less well known is that he also invented popcorn, agriculture, and the weak nuclear force.

So a subscription for Netflix, Amazon, Disney, and HBO will cost me how much? I might want one for the NFL too. Do I come out ahead with all these subscriptions?

There's no need to have them all active at the same time.

I cycled for a while. Probably should again. Having them in parallel seems to give fewer new delights. Subjectively speaking.

All of them sans NFL are probably cheaper than the median Comcast package.

All of them combined. And with Amazon you are getting a lot of perks in addition to the TV content.

The mean TV watching time is ~4 hours down. This number has gone down from 5-6 20 hours 20 years before because it does not include streaming services. https://www.statista.com/statistics/186833/average-television-use-per-person-in-the-us-since-2002/

I think the number of shows is not a bubble. People would watch anything to avoid boredom. This is proved by the 90s TV habits. The only bubble is in expensive shows described as "scripted original TV shows" in the article.

Some consolidation is expected, but not as cathastropic as the FT article portraits it. Perhaps, this article is a message to scare the competitors and their investors into spending less.

For now, I'll go back to the 1990s using the D.F. Wallace essay E Unibus Pluram. I'll be back later to check if something has changed ;)

20 years ago, NBC offered Jerry Seinfeld $110 million, plus the other 3 actors a total of $66 million -- i.e., $176 million -- for 1 more 22-show season of Seinfeld.

Jerry turned it down.

Nobody makes that kind of money anymore, but it's indicative of how much money there is to carve up among a huge number of shows.

Well, 20+ million per year is not bad (2018). https://www.forbes.com/sites/natalierobehmed/2018/10/24/highest-paid-tv-actors-2018-jim-parsons-leads-with-26-5-million/#5cd3e49eab2b

The interesting part is that all these people work(ed) on boring legacy TV networks. Netflix sales TV shows, TV network sale ads. It seems Netflix and other streamers are taking the audience away from more profitable business. Innovation and competition are great, but are the new ones profitable?

My impression is that being cast on a Netflix show is less of a job than a gig in terms of annual income.

In general, the entertainment industry has been out to take actors down a peg or two or three since their pay peaked in the 1990s.

The 90s were the peak of network TV in terms of ratings, they've been in decline for decades since. Meanwhile the supply of shows and networks has ballooned. Of course there's less money now to pay everyone including the actors, on any given show.

It's not 'the industry' doing something, it's supply and demand.

Netflix makes more than half of their revenue from abroad.

The problem is fragmentation. In order to have everything that is made available, customers will have to take out many subscriptions that are "only" so much per month. They add up to a lot more than the annual fees that are charged in many legislatures.
A solution would be for there to be one microcurrency from which customers could pay for individual shows. When their level gets down, they simply top it up with a credit card, like Pay As You Co mobile telephone accounts.
This would be highly democratic. Paying individually for a show would be voting in its favour. If a company produced a poor show, after initial interest wanes following the first one or two episodes, they could take it off.

The fact it hasn't happened suggests transaction costs, including the mental transaction cost of discovering content, make the direct to consumer model infeasible except in some rabidly fanatical niches.

Maybe transaction cost is also the reason why web content providers such as former printed newspaper haven't adopted the microcurrency route as opposed to paywalls. I think there was someone objecting on Marginal Revolution that many of the linked articles were on paywalled sites.
The internet technology that appears to be missing is a means of providing a microcurrency that is cost effective to use and for the service provider.

I haven't used it, but isn't this what Apple News does?

I wonder how you could watch movies in the cinema from different producers before the modern marvel of microcurrencies.

This model already exists. In many cases, you can buy a particular episode of a show, or a whole season, or subscribe to the service that produces it.

They foolishly charge too much per episode. $2 to $3 for a single episode of a season is too much That's $20 to $60 bucks for the season. They prefer that you sign up for the week's trial and then just hang on. People at the margin don't want to do that. I think it makes more sense for them to give you an episode for free and then charge no more than a dollar an episode. As with Kindle books, I think charging 99 cents per episode a year after a popular series has aired online would be good price discrimination and suck in more of the elastic consumer demand.

"I think charging 99 cents per episode a year"

iTunes took off when they went to the $1 per song model.

And I thought Americans were too busy to watch television. 24/7. Too busy to exercise. Too busy to spend time with the family. Too busy to take a vacation. Too busy to call the grandparents. Too busy to cook. Well, apparently not. Tech is entertainment, which is the lure for selling advertising. I learned yesterday that Americans pay a much higher price than Europeans for phones and internet service; indeed, Americans pay a much higher price than Europeans for most goods and services, costing the typical American household an extra $5,000 a year. All that spending deserves an entertainment break, even if the cost of the entertainment breaks us. https://www.hup.harvard.edu/catalog.php

"Americans pay a much higher price than Europeans for most goods and services": are you sure? What happened to the old rule of thumb that what cost a Yank $1 cost a Brit £1?

I dare say you're right about phones: my old dumb phone works virtually free. Not least because I hardly use it for outgoing calls.

"Disney, Apple, AT&T and Comcast"

Which of those are you shorting, Tyler? My hedge fund manager wants to know.

AT&T clearly, Their crushing debt burden and their overpaying for a marginally profitable Time Warner content business does not augur well for future profits. The whole of Hollywood is worth less than 2 weeks of the telco business, but telco executives keep falling for stardust.

It's also useful not to have so much choice. Kind of like how Costco doesn't give you so much choice.

Seems you missed the key word in that comment.

That's a bit like saying that it's useful to have a university library that does not have too many books and journal subscriptions.

That's the number of shows, but it also seems shows are shorter-lived, so the question is whether the total hours of scripted entertainment are rising or not. I would still expect them to do so as there is clearly a bubble in streaming, but not every player can be a winner with ever-increasing competition for attention.

You would think with the much more sophisticated analytics available to Netflix et al they would be able to identify the kinds of shows that appeal to their audiences, but clearly it's still much more art than science.

There are three externalities at work here.
1. Television shows were traditionally non-excludable. You couldn't charge for them so they were paid for by advertising etc. Leads to underproduction.
2. Television shows are non-rival. Marginal cost of an additional viewer is zero. If you overcome the excludability problem you typically end up charging more than marginal cost so again there is underconsumption. Various packages (cf. Prime) can overcome this to a large extent.
3. Positive crowding externality. People want to see shows that other people also see. This has the opposite effect: When there are only a few channels and a few programs everyone ends up seeing the same programs. From this point of view having loads of shows involves a large negative externality.

Hard to say which development is of the largest magnitude. I vote 3.

While the number of programs has increased, the number of episodes is about the same. It takes three seasons of a streaming show to equal one season of a traditional network show.

This is true, AND the streaming shows are happy to wait a long time between seasons. There's none of this "September to May" pressure that used to exist.

Better Call Saul has put out barely two seasons worth of episodes (40) in almost five years.

I shouldn't have said streaming; I meant today's shows vs 1990 shows.

Goes to show you what tax subsidies and breaks can do for you in terms of increasing supply.

Trim the subsidies and tax breaks for movie and TV production to find out what the market really is.

This is just a game of rent seeking. Ask Steve Bannon and Mnuchin and the "investors" including Jeff Bezos.

I am watching the same amount of TV as probably 20 years (maybe 1 hour per day) but I would say the quality is better and I am watching more scripted drama vs news, or just current affairs.

I think this is partly about the long tail - previously TV shows were targeted for maximum views, now content can be more targeted as the channels are fragmented. There is also a technology improvement, with modern camera's and video editing software the back office costs are much lower (not even factoring in cheap CGI. Also, as others have mentioned, the TV market is now much more global which means funding can be found. I have some relatives involved in TV production in the UK and they say the business is booming there as well.

"That would be one way to get all of those costly special effects out of so many movies."

Tyler: are you saying that contemporary video entertainment fare emerging from the bowels of Hollywood constitutes something other than mere exhibitions of CGI capabilities and studio production values?

A fine assertion--but surely the available data prove conclusively that Americans have become habituated to viewing exhibitions and examples of nothing but studio production values for years and decades already.

So are you suggesting that Americans are somehow becoming jaded with Hollywood CGI spectacles and bare exhibitions of studio production values?

What might be driving such "progress"?

It is Red China who forces Americans to produce CGI-loaded garbage. I watched 5 minutes of the Independe Day sequel and turned off the TV exasperated when I noticed there were more Asian ators than American ones.

Because the products and dramatic vehicles emerging from Hollywood studios show much more difficulty with ably portraying the intrinsic complexities of human realities than the real-life behaviors of celebrity producers, celebrity directors, and celebrity thespians demonstrate, it seems possible that China had no more influence in spreading CGI spectacles or in fomenting Hollywood's exhibitions of bare studio production values than the Chinese could be held responsible for all the troubles now afflicting all of our classes of commercial cults of celebrity.

Hollywood's recent career (past 20- or 25-years or so--under Boomer management, that is) has shown its distinct propensity for depicting "human reality" only in terms more fit for depicting "human cartoons". (The original case you cite with Independence Day amply illustrates my argument: the human characters were so cardboard [or computer-generated], the dialogue was so glib and otherwise so flimsy, it was next to impossible to watch the thing to the end without pulling enormously for the under-matched aliens.)

It is not that simple. Evidently, Independence Day was nowhere near perfection, but, at its core, it was a tale of American resilicience and courage. It was deeply rooted in the American Dream. Now, if the five minutes I watched are any indication, the franchise has become just a People's Liberarion Army publicity brochure. I retched.

Red China rules Hollywood with an iron fist:

https://www.independent.co.uk/arts-entertainment/films/news/richard-gere-big-hollywood-movies-china-tibet-buddhist-dalia-lama-chinese-audience-blockbusters-a7693256.html

https://www.businessinsider.com/top-guns-maverick-appears-changed-to-please-chinas-communist-party-2019-7

https://www.dailymail.co.uk/news/article-2237717/Red-Dawn-remake-swapped-Chinese-flags-insignia-North-Korean-ones-fear-losing-billion-dollar-box-office.html

As much noise as Ayn Rand and House Un-American Activities Committee made about Song of Russia (filmed when America and the Soviet Union were allies), the truth is, the Soviet Union was never able to dictated us terms as Red China does.

@ Tyler Cowen

Take a couple of hours from whatever it is you do and go see JoJo Rabbit. Almost zero CGI and quite entertaining. Scarlett Johansson is a terrible actress but she doesn’t ruin the film.

Scarlett Johansson IS a special effect, surpassing all CGI.

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