When reality bites, big profits pour in

TV shows featuring celebrities are banding channels, producers, advertisers and audiences together

Reality shows are popular all right, but those featuring celebrities are proving to be a rage, not just among television audiences but advertisers and programme sponsors. And producers who are investing big bucks are not complaining at all.

Nor are celebrities themselves. Rather than portraying fictitious characters, celebrities seem to enjoy the idea of playing themselves, showcasing their personality. And their fans in particular and audiences in general seem to love it too. It seems there never ever was another win-win-win-win-win-win like this one.

Take, for instance, Hunan TV's Dad, Where Are We Going?, which features celebrity fathers taking their children on three-day trips to idyllic towns or villages, far away from urban areas, without mothers and helpers in tow. The show's third season started in July soon after the hugely successful first two seasons got millions of viewers aged eight to 80 hooked.

Sponsorship of such popular shows does not come cheap. Inner Mongolia Yili Industrial Group Ltd, China's leading dairy producer, shelled out 500 million yuan (S$108 million) for Season 3, exceeding the 312 million yuan it paid for Season 2.

Season 1, which aired from October 2013, sold main sponsorship rights for only 28 million yuan to a pharmaceutical brand.

The 500 million yuan deal for Season 3, reached in 2014, accounted for 14.1 per cent of the dairy producer's net profit in the first three quarters of last year.

Yili's faith in the programme seems to suggest it may have benefited from the sponsorship by way of rise in sales and better brand visibility, Jian Aihua, a food industry researcher with the Shenzhen-based CIC Industry Research Center, told the National Business Daily newspaper.

One reason could be that groups like young people and mothers-to-be are the target consumers of Yili as well as the target viewers of the reality show.

The phenomenal successes of Dad, Where Are We Going? and other reality shows such as The Voice of China have spurred a series of reality shows. For instance, Hunan TV introduced Divas Hit the Road, Season 1 in April of last year. Zhejiang TV started Running Man, Season 1 in October 2014. Shenzhen TV introduced The Amazing Race, Season 1 at the same time.

The frenzy continued this year. Hunan TV launched another show called Wonderful Friends in January. Jiangsu TV introduced We Are in Love in May, and Dragon TV started airing Go Fighting in June.

These shows cover areas ranging from outdoor sports to overseas journeys, bonding with pets and relationships. And celebrities who enliven these shows range from iconic singers to movie stars, sports figures and yesteryear entertainment industry luminaries.

Advertisers and sponsors accorded different treatment to each of the shows, depending on their popularity. While popular shows had no difficulty in attracting advertisers and fierce bids for sponsorship, some little-known programs received modest sponsorships only after the broadcast of first few episodes, said Feng Jun, a senior analyst of EntGroup Consulting, a Beijing-based entertainment industry consultancy. "They have polarised the advertising revenue."

Money poured into shows in different forms. For example, Running Man, Season 4 fetched 500 million yuan in main sponsorship from Yili. Online tourism firm Tuniu Corp and cell phone manufacturer Oppo Electronics Corp forked out 150 million yuan and 130 million yuan, respectively, for special partnership rights. Internet rights, ad imbedments and single-project partnership were other forms of revenue for TV show producers and broadcasters.

"A single season of Running Man has generated more than 2 billion yuan in advertising revenue for Zhejiang TV, the producer of the show. Two seasons of this show in one year have created almost half of the total ad revenue for the TV station," said Peng Kan, research and development director of Legend Media, a Beijing-based consultancy.

Peng has extensive experience in advising on variety shows for a number of TV stations and media companies. "More and more TV stations are into outdoor reality shows as they have more room for advertising, and have the potential to work more deeply with brands."

For instance, in Dad, Where Are We Going? Season 3, one episode of the show was shot in Yili's pastures in near Urumqi, capital of the Xinjiang Uygur autonomous region in northwestern China. In this way, Yili's brands forged deeper bonds with consumers-cum-viewers, which was much better than subliminal advertising.

Although advertising remains the main source of revenue, reality show producers also make money by allowing movies with the same titles to be made, and through merchandising by way of mobile games, books and toys.

For instance, TV shows that spawned same-title movies include The Voice of China, Dad, Where Are We Going? and Running Man. Go Fighting the movie is under post-production and scheduled for release in January 2016.

Box-office receipts of these movies vary. Dad, Where Are We Going? netted 700 million yuan, Running Man took in 430 million yuan, but The Voice of China could pull in no more than 3 million yuan.

"Reality shows that can be developed into successful films are rather limited. Much more is required than a good concept and popularity to make a movie commercially successful," said Peng.

Not unexpectedly, popularity of reality TV shows has inspired online video platforms to produce their own versions of variety shows, rather than spending significant amount of money to buy webcast rights for TV shows.

Leading online players such as Youku Tudou Inc, iQiyi.com, Tencent Holdings Ltd and LeTV Holdings Ltd are not just producing their own reality shows, but also are redefining them by steering clear of high-cost celebrities and instead featuring commoners in the lead. Celebrities are restricted to guest appearance, if at all.

Online platforms also offer more interaction with audiences, liberal censorship in terms of witty or risque remarks, and more flexibility in, and wider scope, for partnerships with advertisers.

But they are unable to match TV stations in terms of mega budgets for production.

"Under the current circumstances, it would be hard to expect any revolutionary change or breakthrough in the quality of reality shows produced by online video platforms, as their production teams are actually made up of people who used to work for TV stations," said Peng.