Peak TV May Be Coming To An End

Each year at the TV Critics Association Press Tour, John Landgraf, the Chairman of FX provides the industry with an update on the number of original scripted adult targeted programs. With the exception of the pandemic year of 2020, the number has climbed each year from 182 programs in 2002 to 559 in 2021. As this trend continued, Landgraf, in 2015, used the sobriquet of “Peak TV” to describe the annual increase.

In recent years, Landgraf has wrongly predicted Peak TV has peaked. Coming off a high of 559 programs 8n 2021, this year Landgraf told reporters, “I’m going to foolishly make another prediction, which is that 2022 will be the high watermark of Peak TV.” A report from Ampere Analytics agrees with Landgraf’s forecast. In its report Ampere found over the last six months of 2022 the number of scripted series orders targeting U.S. viewers audiences has dropped year-over-year by 24%. When compared to 2019 it’s a decline of 40%. Ampere Analytics forecasts 467 scripted series orders for this year. There are a few reasons why Peak TV may have peaked.

Estimated Number of Adult Scripted Entertainment Shows

(Broadcast, Cable & Streaming)

2002 182

2012 288

2013 349

2014 389

2015 422

2016 455

2017 487

2018 496

2019 532

2020 493

2021 559

Source: FX Networks

Production Costs: Over the past few years fueling “Peak TV” was streaming video. Starting about ten years ago, NetflixNFLX
raised the bar of streaming video with such “A-list” talent working on such popular programs as House of Cards and Orange is the New Black. These programs increased production costs and grew subscribers. Since then, a number of competitive streamers, launched by big media companies, has further fueled Peak TV, driving up programming costs.

In 2022, Netflix had a content budget of $17 billion including 68 original movie releases. By comparison, in 2021 its programming budget was $13.6 billion. Other media companies (and Netflix competitors) have been ramping up their content budget as streaming becomes a bigger part of their programming strategy. For example, Disney said they would invest $33 billion in content for the year, up from $25 billion in 2021. Warner Bros. Discovery is expected to grow their content spending by 8% this year to $22.4 billion.

In 2020 it was reported AmazonAMZN
Prime spent $11 billion on TV, film and music. With the addition in 2022 of Thursday Night Football and the debut of Lord of the Rings: The Rings of Power, TV’s most costly program, the budget more than likely increased. AppleAAPL
TV+ content budget was an estimated $6.5 billion. In total, Wells FargoWFC
estimates the nine largest media and tech companies would invest $140 billion in content. As audiences migrated to streaming video it became a programming priority over linear TV.

Broadcast Programs: The 2022-23 broadcast TV upfront was marked by the fewest number of pilots ordered and little new scripted programs. As ratings continue to decline only live sports and their expensive media rights have been attracting viewers in large numbers. Another trend has been the number of games shows airing in prime time recently. While game shows have been a programming staple since the early days of television, in recent years there has been an abundance of game shows rebooted for prime time. On any given night viewers can watch Celebrity Jeopardy!, Celebrity Wheel of Fortune, $100,000 Pyramid, Press Your Luck, Password, Name That Tune, The Price Is Right, The Wheel, Match Game, Lingo and on and on and on.

Game shows cost less to produce and attract an older audience, the demographic most likely to watch broadcast television. Marc Berman, Editor in Chief of Programming Insider, notes, “Game shows are rarely cancelled, instead they are being brought back to replace an underperforming time period.”

Cable Programs: Not very long ago, cable was the home of television’s most critically acclaimed and top-rated programs. With cord cutting and media owners siphoning profits from cable’s two revenue streams to fund streaming programming, times have changed. Today, with many top-tier cable networks relying on off-net, licensed content and recently released theatrically movies for content, ratings have nose-dived. Among the reasons cited for cord-cutting has been cable’s content has become available online.

One notable ratings exception has been the Hallmark Channel. The cable network provides viewers with a continuing diet of scripted “feel-good” original movies throughout the year. In third quarter 2022 Hallmark Channel had more primetime viewers than such broad-based entertainment networks as USA, TNT and FX. Few would have predicted that just a few years ago.

Streaming penetration: Subscription growth has been an important revenue source for streaming content. This year subscriber growth of streaming providers has slowed driven by competition. According to the latest DASHDASH
study from the Advertising Research Foundation (ARF), the U.S. household penetration of prominent streaming providers have been relatively flat year-over-year. For example, Disney’s penetration grew from 39% to 41%, HBO Max increased from 27% to 29%, Netflix dropped from 69% to 66% and Amazon Prime declined from 58% to 56%. The ARF points out that Paramount+ grew from 11% to 17% benefiting from Yellowstone one of the most popular original scripted entertainment programs.

Streaming Programs: Media critics have pointed out that with more competition, Netflix has adjusted its programming strategies. While such slickly produced shows as The Crown and Bridgerton have been renewed, Netflix is producing more Hallmark-type movies along with more cooking/baking programs prevalent on the Food Network. Besides more inexpensive content, Netflix launching an ad supported tier, are more likely to stream shows that are brand safe. HBO Max saddled with a reported $50 billion debt load, has cut back from the number of new series ordered from 44 in the first six months of 2021 to 28 this year (including Westworld). With layoffs, slowing subscriber growth, budget cutbacks and declining market value, subscribers can expect less costly content in the upcoming years. Others are expected to follow with possible exception of the deep pocketed Apple and Amazon.