Movies vs. Television Industry: An Overview
These days, it seems like it is all about the small screen. More and more people are gathering around to binge-watch shows, while fewer and fewer people are heading out to movie theaters to plunk down a hefty fee for two hours of entertainment. The COVID-19 pandemic has further exacerbated this divergence. So which entertainment sector is more profitable: movies or TV? Let’s take a look.
- Visual media entertainment is a multi-billion-dollar business, concentrated in film and television production.
- The film industry, referred to colloquially as "Hollywood," produces movies that can rake in as much as billions in profits in a single film, earning money from ticket sales and branding deals.
- Television series can also be lucrative for hit shows, earning revenue from advertisement spots.
- New digital entrants like Netflix, Amazon, and Hulu produce both TV shows and films, delivered via internet streaming.
The Movie Industry
For many people, it is tough to justify spending $20 to $30 per movie when you factor in popcorn and drinks with the ticket price. Hollywood studios have been churning out more big-budget tentpole films (films whose earnings are expected to bolster the company financially), 3D movies, and action-adventure tales since audiences are more likely to splurge on a flashy, explosion-heavy movie than they are on a small, intimate drama.
Filmmaking is also a very risky investment, since most movies, even those small, intimate dramas, take several million dollars to make. Still, it’s definitely a hugely profitable business—if you hit the jackpot (aka the target audience). When the theatrical run for a film ends, studios earn money from home video, streaming, and video on demand (VOD).
The Television Industry
So which medium is more profitable, movies or TV? One of cable’s most successful brands, HBO, saw enormous profit margins with now-classic shows like The Sopranos and Sex and the City. Then along came Game of Thrones.
Competition from Netflix Inc. (NFLX), Amazon.com Inc. (AMZN)'s Prime Video, and Hulu inspired HBO to roll out its standalone subscription service HBO Max. HBO has also partnered with major movie studios to launch movies exclusively in theaters and on HBO Max.
Meanwhile, many of the major TV companies are launching their own streaming services to stay competitive. This includes Comcast's launch of Peacock, which includes channels and networks like Oxygen, Syfy, CNBC, NBC, Universal Pictures, and DreamWorks.
Then there's ViacomCBS's Paramount+, which includes Nickelodeon, Showtime, CBS, NBC, ABC, Miramax, and Paramount Pictures. Apple TV also launched in 2017 from Apple (AAPL).
The Bottom Line
Major Hollywood studios can bring in millions of dollars in profits from a single film, while a respected cable network like HBO can make money off a huge hit like Game of Thrones, which costs millions to shoot. Since unsuccessful projects and financial flops are par for the course in both film and TV, there is no guarantee which shows or potential franchise will be the year’s great moneymaker. When it comes to who makes the most money, it’s tough to compete with a company like Disney (DIS), which can earn tens of billions by combining movies and TV shows, plus its streaming option Disney+, with its theme parks.