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Marketing High-Quality Commercial-Free Cable TV – And How It Makes Money?

May 2017 Marketing, Product

Ever wondered how these totally slick commercial-free episodes of compelling television shows like Game of Thrones, House of Cards, or Homeland make money for the cable networks and the production companies?

The facts are that they not only make money, they are immensely profitable.  Here’s how.

Game of Thrones is a good place to start. Produced by Home Box Office (HBO), this enormous series brings in more than eight million viewers for each episode, and continuously breaks records. Let’s take a look at its commercial-free revenue model. One thing HBO doesn’t do is cut corners on its budget.

While HBO doesn’t sell commercial time, their customers pay between $5 and $15 each month to receive HBO. Some customers receive it “free” as part of cable packages they purchase. It is estimated that $10 per month goes to HBO and its sister network, Cinemax.

Budget for each episode is approximately $6 million or $60 to $70 million for each season—about the price of an average-sized theater-oriented motion picture.  Revenue streams from subscriptions and other sources average over $1 billion for HBO and nearly $700 million for Showtime.

It’s also important to note that an undertaking like Game of Thrones also serves as “channel seller” to market HBO. Other monster hits like House of Cards and Homeland also serve as “channel sellers.”

Jon Lafayette, business editor of Broadcasting & Cable, says, “HBO is the most profitable network on TV. They’re known for spending a lot of money working with hot producers, spending a lot of money on content and production and that’s why people subscribe to HBO.”

It is estimated that 35 to 40 million people subscribe to HBO and its sister network, Cinemax—both are owned by Time Warner.

Since programming is the coin of the realm for the cable networks, an annual expenditure of $60 million is chump change when compared with the basic subscription revenue stream as well as lucrative secondary and merchandising market streams of income.

If you want Game of Thrones but don’t wish to subscribe you can buy each episode at $4 per and season packs can be bought for $55 or special editions for $100.

There are other cash streams, for instance when HBO sells its product to other networks like Netflix. Then there are the foreign markets. HBO has 60 million subscribers outside the United States.

Finally, there is merchandising. There are currently 400 Game of Thrones related items for sale including T-shirts, dragon egg paperweights and pint glasses.

By the way, here’s why it is so easy to find top-notch talent for the cable series: Kevin Spacey, star of House of Cards, Peter Dinklage from Game of Thrones and other top Game of Throners make $500,000 per episode. Claire Danes, Homeland’s lead, makes $450,000 per episode.

So, continue to binge on cable blockbusters because everybody is making big money for your time.



About the author

James T. Berger, Managing Editor of The Wiglaf Journal, through his Northbrook-based firm, James T. Berger/Market Strategies, offers a broad range of marketing communications, research and strategic planning consulting services. In addition, he provides expert services to intellectual property attorneys in the area of trademark infringement litigation. An adjunct professor of marketing at Roosevelt University, he previously has taught at Northwestern University, DePaul University, University of Illinois at Chicago and The Lake Forest Graduate School of Management. He holds degrees from the University of Michigan (BA), Northwestern University (MS) and the University of Chicago (MBA). Berger is an often-published free lance business writer who has developed more than 100 published articles in the last eight years. For more information, visit www.jamesberger.net or telephone him at (847) 328-9633.

James T. Berger
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