Friday, April 27, 2007

Why Are There So Many Reality Shows?

Economist Austan Goolsbee has an article in the NY Times that looks at the economics of reality shows. He starts with a question of why there are so many reality shows (in particular, shows like American Idol), and comes up with the following initial answer:

Some say it’s just that people now lack the attention span for old-style television or that our tastes have changed.

Most insiders point out that reality shows cost much less to make than scripted shows, and, they argue, this is just a profit play by the broadcast networks.

However, he astutely points out that if reality shows are popular because they are cheap to make, why weren't they popular 20 years ago. As Goolsbee says, "Surely the broadcast networks wanted to save money back then, too."

Goolsbee then cites Harvard economist Richard Caves, who comes up with the explanation that reality shows are popular because there are so many TV choices with the proliferation of cable and satellite:

He points out that such incentives depend on the size of the potential market. The programming is a fixed cost — networks pay for the programs even if nobody watches. If paying an extra $1 million to get a star onto a show, for example, raises every customer’s love of the show by the equivalent of $1, the investment more than pays off if there are 10 million potential viewers. But the $1 million investment would be a terrible flop if there were 10,000 potential viewers.

So the increase in reality programming is not just a matter of broadcasters wanting to save money. It’s that a shrinking potential market gives the networks less incentive to spend money. They can’t recoup it with enough viewers.

Any opinions on this question of reality show popularity?

(Source: Marginal Revolution)


Anonymous said...

this is a very intersting theory on why so many reality shows are being created for tv now. I however do not buy that the main reason reality shows are popular is because they are cheap to make. I actually chose to believe the idea of reality shows was not really though of until around 10 years ago. I believe people use to enjoy scripted tv shows, but like every industry someone is trying to create the hot new thing. i think the hot new thing 10 years ago was reality tv and it has cought on and stayed how. I believe cheap production cost is just a factor why there are abe to be so many, but no the main reason there is reality or it is popular.


Anonymous said...

they are popular because people watch them. many of the reality shows these days are hardly even reality and seem so scripted that it is not even funny. take for example, the bachelor. my mom watches that garbage and any time i go downstairs i have to listen to it. all i ever hear them say is "i have a connection" blah blah blah with this dude. but people like my mom are obsessed with these shows and continue to watch them. i think that once survivor was introduced as a reality show and it went well that all the other starting popping up because they saw the demand. i disagree that reality shows are cheaper though because a show like survivor cannot be much cheaper than any other scripted show.

-Austin Lintault

Michael Maynard (TRD) said...

The first TV reality show was aired on PBS over 30 years ago about the
Loud Family - "An AMerican Family".
It was an unprecendented inside look at family life. The viewers were also inrtoduced to the first real open gay male on television - Lance Loud.

What does not get addressed is the importance of technology in the creation of reality shows. The participants are usually filmed 24 hours per day. It takes a tremendous amount of storage to save one day's footage, let alone 7 months, as the Loud Family was filmed.

But most "reality" shows are a canard. Read the credits for the
show. Why does a "real" reality show need writers?

What concers me most is how vicious and angry the participants in these shows act, whether real or not. The only way you can become a participant on these shows is to be a backstabbing, throat-cutting sleazoid? I sure hope not. The tells more about what the viewers have become than what these shows present.

Cary Jorgensen said...

Actually the first American reality show was Alan Funt's Candid Camera in 1948.

Nanki Human said...

It was really interesting reading why you say that reality shows are so popular. I never knew that it is cheaper to make a reality show than a scripted show, but i do however know that money is not the only factor to why reality shows are popular. There is a big market for these kind of shows, and it is something new. People like seeing what goes on in the everyday lives of celebrities. A new market opened thus increasing the popularity for reality shows. But I do agree with you as well. If it is cheaper to make, why not make it? -Nanki Human