Hi, a friend has an interview coming up at a streaming service and was hoping to gain a better understanding of the PnL drivers for a Netflix show/movie. This is essentially asset level so subscription revenue from the platform would not be included. One of the largest drivers is the headcount of the show. Are there any others that you can think of? Thank you!
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My guess. Two main buckets of costs: 1. Production budget (incl. salaries, equipment, studio rent, visual effects, montage etc.), 2. Advertising. Two buckets of revenue drivers: 1) Based on monetisation method (i.e. movie theaters, streaming platforms, FTA/PayTV) you'll have some revenue streams which might be followed up by other IP exploitation (the character - if we're talking for kids shows)
The IP point is definitly one I didn't think of - thank you!
Product placement and other endorsements, maybe?
Yes, absolutely. Product placements or other kind of sponsorships can bring in extra revenue too (see James Bond - Aston Martin, Back to the future - Nike, Fight Club - Starbucks etc.)
In movies/TV, expenses are separated into two buckets: above-the-line and below-the-line costs. Above are fixed and below are variable, but below costs are also replaceable and can be eliminated. Different kinds of shows have different mixes i.e. GoT with a huge cast, SFX, other talent is going to have a higher proportion of above the line costs compared to a Rachel Ray cooking show.
This is specifically for the budget side of things though. ATL and BTL doesn't include things like distribution fees or promotion / advertising / PR costs.
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