Getting Into The Industry

Monday, 26 January 2015

Everything you needed to know about the industry: Public Service Broadcasting

Public service broadcasting is where a TV program is broadcast purely for the public benefit instead of just for commercial, sponsorship and advertisement reasons. TV programs that are often publicly broadcast include the local news and also broadcasts that are related to art and religion. Public service broadcasting's main purpose is to inform, educate and entertain the general public.

The UK currently has 5 public service TV broadcasters, which are the BBC, Channel 4, S4C, Channel 3 and Channel 5.

Public Service Broadcasting collects its funding in a number of ways. The BBC mostly collects their funding via the TV licence, meanwhile S4C collect some of its funding from government grant. Some public service broadcasters like Channel 4 collect their funding via advertisement. Although they do advertise like ITV, all of Channel 4's income via adverts go straight back into the organisation.

Public Service Broadcasters are funded via these methods in order to be able to have the money needed to make their productions. For example, organisations like the BBC need to rely on the TV licence in order for the organisation to keep producing content as they do not get any income from advertisement.

The BBC are the most popular public service broadcaster in the UK which as we discussed, collect the majority of its funding through the TV licence. With this money, what they do is they then put it back into the company to fund new TV shows, and are able to pay all the costs needed to keep all their channels on air.

The TV Licence

For	Against
1. A wide range of shows 2. If there was no TV licence then the government might take it out of taxes instead - Which is not fair on tax payers who don't watch TV 3. No adverts - The BBC don't need to thanks to the TV licence, if there was never a TV licence this would have to change	1. The TV licence brings unfair competition on commercial broadcasters. This is because commercial broadcasters don't get any funding from the TV licence, meaning some public service broadcasters like the BBC may get an 'unfair' advantage 2. It can be too expensive 3. You may not even support a company like the BBC (so you're paying for a service you don't watch/support)

Organisations like Ofcom regulate public broadcasting to make sure certain TV broadcasters include a specific amount of public broadcasting in order to earn the licence to broadcast.

Sources

Everything you needed to know about the industry: Commercial Broadcasting & Funding

Commercial broadcasting is where a broadcasting company is privately owned, and they very often generate profit too. Commercial broadcasters main source of income is via adverts, examples of commercial broadcasters that advertise for income are ITV and Sky.

Another source of income commercial broadcasters get is from sponsorship deals. An example of a sponsorship deal is the ITV's X-Factor and Talk Talk. X-Factor show a small Talk Talk advert before their show, meanwhile Talk Talk give their own adverts and website an X-Factor theme letting people know that they are related to X-Factor via sponsorship. On a side note, when X-Factor is hosting an active series, Talk Talk usually hosts a competition in which the participant has to upload a 5 second singing video in order to appear in one of their adverts, directly linking the product and the show.

Because commercial broadcasters don't benefit from the same things public service broadcasters get like the TV licence funds, they have to rely on their own advertisement and sponsorship deals in order to keep functioning. So for every advert they show, and for every sponsorship deal they have, the commercial broadcasters gets paid by the other party for that, therefor that is exactly how a commercial broadcaster gains the funds to produce their content and profit.

You may also be wondering how much advertisement companies pay commercial broadcasters to advertise. This all depends on the time of day, year, region and the channel you are advertising on. For example, ITV1 would be a lot more expensive to advertise on compared to a channel like ITV4, and advertising in the afternoon would be a lot more expensive compared to advertising at four in the morning.

Commercial broadcasters not only gain their funding via advertisement, but they also gain funding via subscription fees too, and as we discussed earlier, also sponsorship deals.

So how do they gain money via subscriptions? Well, firstly, the viewers may have to pay the commercial broadcast in order to watch their content, this is what you call a subscription. And this is exactly one strategy a commercial broadcaster uses in order to gain the fundings to be able to produce content to the viewer.

An example of a subscription service is Sky. They are a veriaty of channels and you do have to pay extra for additional Sky channels. For example if you want to watch Sky Sports, you have to pay a little extra fee, same with Sky movies. This is how Sky make quite a huge percentage of their income which allows them to be able to gain profit and keep functioning as a company.

Sources

http://en.wikipedia.org/wiki/Commercial_broadcasting
https://sales.talktalk.co.uk
http://www.itvmedia.co.uk/tools/rates

Everything you needed to know about the industry: Horizontal Integration

Horizontal integration is where a company buys a rival company that offers the same or very similar service. An example of horizontal integration being used in the film and TV industry is when a film distributor buys a rival distributor, or perhaps when a television production company buys another production company.

Horizontal integration could also mean a television channel running another television channel therefor overlapping the audience. Why? Because this allows the company to keep more of the available audience, therefor more income.

An example of a broadcaster that does this is Channel 4. They have their main channel, Channel 4, but they also have their secondary channel, Channel 4seven. Channel 4 claim it was created in in response to viewers saying that with so much choice they sometimes missed the best program, so they made 2 channels of the same type. Overall this was a very wise move by Channel 4 as it allows them to cover a wide variety of their target audience with the ability to be able to air two program at once.

Sources

http://en.wikipedia.org/wiki/4seven

Everything you needed to know about the industry: Vertical Integration

Vertical integration is where a company owns all the organisations required to complete the production of their work. To put this into a more simpler example, if a factory was making toys, they would also own all the different companies needed to supply the parts needed to make the toy.

Why would a company want to do this? Firstly, by owning everything needed to complete production, it keeps cost down as they will not need to pay any 3rd party companies during production. Secondly, they have full control over everything. Because the company is not relying on another company, the different departments that are doing the different stages can co-operate at the best times and in the best ways in order for success. And thirdly, they get to keep all the profit made in their productions as no company has a cut in the production.

A real life film and TV related example of vertical integration is the BBC. Vertical integration applies to the BBC because they have absolutely everything required to complete a production. They have BBC Worldwide which sells program overseas, BBC DVD and iPlayer, BBC Television (BBC1/2/3/4), BBC Studios and Post Production (studio and editing) and BBC creative departments. All these departments work together to create what we know as the BBC.

Sources

http://en.wikipedia.org/wiki/Vertical_integration

Everything you needed to know about the industry: Independent Production Companies

Independent production companies are companies that are on their own, they are privately owned by an individual or a company. These companies purpose is to co-operate with a number of commercial broadcasters such as ITV in order to produce content. They are not as famous as broadcasters like ITV, but 40% of what ITV put live on air are thanks to these independent production companies, and are most likely the creators of some of your favorite shows.

An example of an independent production company is Tiger Aspect Productions, a British independent production company that are famous for producing the world famous sit-com 'Mr. Bean'. They fully produced the show, meanwhile ITV decided to air it and of course give Tiger Aspect Productions a cut of the profit. Other independent production companies include Endemol, Four Two Productions and Lime Productions who also produce content for commercial broadcasters to use.

A huge benefit of a commercial broadcaster like ITV using content from independent producers is that ITV don't need to spend anything on production. Because a show like Mr. Bean was already filmed and edited, the only work left for ITV to do was air it, which saves them a lot of money.

A disadvantage of commercial broadcasters using independent production companies is because the independent production company will demand a huge cut for allowing a company like ITV to air their show. Although no cost will go into production, ITV will have to buy the rights, so it may end up being more expensive if the show is a flop.

However, an advantage of creating an independent production company is that you get to keep all the profit made, although this comes at a cost as a disadvantage on the independent production company itself is that they're is so much competition it may be hard for an unestablished independent production company to thrive. Which is why many production companies like to team up with bigger companies and broadcasters for the extra safety feature.

How are these companies funded, and how do they thrive in this competitive business? Well firstly, they usually collect their fundings via commercial production companies buying the rights to their productions, which allows them to get profit and gain the fundings for their future productions. However, nearly all independent production companies start off as small, part time companies. Endemol, which is probably one of the biggest production companies in the world, started out in 1994 as a small time company, but in 2000 was sold the Spanish telecom and media corporation Telefónica. And in 2011 they had to get a loan to overcome debt issues. Many small independent production companies will use loans to hopefully make their break into the competitive business. However, where one company is successful, another one flops, so it is a very risky decision to draw a loan, and should be thought about.

Sources

Everything you needed to know about the industry: Product Placement

Paid product placement is where the item advertised is shown in the narrative. Companies may decide to use production placement because it is a very effective way of advertisement, it does not interfere with the show/plot and it is a very easy and cheap method of advertisement for the broadcasting company.

Broadcasting companies that may choose to use this method of advertisement are commercial broadcasters, so ITV would be a primary example of a broadcasting company that use paid product placement. It is also very important for a company to make sure the right product placements are in the right show, as it'd be pretty pointless in have a paid product placement of a brand of car on a children's channel. But the point is that there should only be a product placement if the product is also similar to the audience of the show in order for the product placement to be effective. An example of a successful paid product placement would be instead of have a paid product placement of a car in a kids film, perhaps have a brand of toys in a kids film. This is because children are the most common target audience to use toys, therefor advertising any brand of toys that are relevant to the film would most likely be a form of successful paid product placement.

An example of real life product placement is the TV show 'American Idol'. The judges are drinking out of Coca Cola cups. That's no accident! Coca Cola deliberately paid for this right as it gives them advertisement inside the TV show.

Another company that like to use paid product placement is apple. An example of them using product placement is in a TV series called 'House'. Apple purposely paid the creators of House to include an apple laptop into the story. This does not destroy the narrative of the story because they include the item into the narrative, making it a paid product placement.

Sources

Everything you needed to know about the industry: Global Operations

Global operations is when a company operates on a global scale, many British broadcasting and film companies do this.

The BBC is a primary example of a UK broadcasting company that operate on a global scale. For example, BBC worldwide is the parent company, and below it are other BBC owned companies also known as subsidiaries. Subsidiaries of BBC worldwide include national BBC companies like BBC America and BBC Scotland. So to sum it up, BBC operates like a pyramid, with BBC worldwide being the parent company controlling all the subsidiaries.

Sources

http://www.bbcworldwide.com/