How do game shows/networks have so much money to give away as rewards?
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Think of it this way. Instead of paying actors, writer, etc., they use that money for prizes. Instead of paying actors, they pay contestants.
The winner of Jeopardy makes what, $20,000 per episode? The lead stars of a popular show might make $1 million per episode.
In some cases, the shows don’t pay for prizes. On the Price is Right for example, the car companies might be willing to give those cars for free because the show advertises the car. Instead of paying $25,000 for a commercial spot, they give away a $25,000 car for the show to promote it.
To add to what the others said, your reality relative to money isnt the same as the one of the people entertaining you. Its literally peanut scraps to them. We are so, so much poorer than we realize.
Advertising, the same way regular shows make money.
Infact, game shows are basically the *cheapest* type of TV show you can make. By like…a wide margin.
It’s just also the only type show in which part of the finances is talked about. But for say…jeopardy the host Alex Trebek would made about $78,000 *per episode.* On an even moderately successful sitcom or TV show every single main actor can expect to make *at least* that much per episode. On the really really popular shows actors can make over $1 million an episode. Not to mention you need a small army of writers, editors, and a whole slew of other crew. (some of which are needed for a game show, but it’s still way less)
Getting away MAYBE 100k an episode to a winner is basically peanuts.
As an addition to everyone’s calculation, the 5 year old explanation is they can afford it because it’s not a lot of money at all. Like, not even relatively close. For a tv studio, game show money is pocket change.
TV budgets even for bad shows are bigger than most people imagine. Even horrible C list tv series pay actors tens of thousand an episode. On the uppoer end, you have Friends, 2 and a half men and Big bang theory seeing individual actors paid over 25 million a year. Add the cost of costumes, multiple sets to film in, more elaborate makeup than a game show, writers, and it all adds up fast.
If TV studios can afford to spend that much for bad, risky TV series, that means ad revenue is still very good. So it’s nothing for them to drop even a few hundred a week as “prizes” considering how much they’re not spending on production and actors.
Because it’s a lot cheaper to have free contestants than paid actors; because game shows have a single set, no on-location filming; can film 5-6 episodes a day so efficient use of crew; sponsorships for prizes; shows have commercials run during their run time to pay for shows.
They generally still work out to be cheaper than other shows, because so many of the other costs that TV shows have are gone or reduced. No actors to pay. Often only one host. You don’t need a massive crew since they’re just doing the same things every episode. The set never changes so you only need to pay for that once, and it doesn’t cost a whole lot to set up some podiums and a screen. You need a few writers. But there’s really not much else.
They get that money from advertising like anyone else. That’s why game shows in smaller countries like the UK have smaller prizes, they’ve got less money coming in from advertising so less to give away.
And most of this can be calculated. Sometimes you have a show like Jeopardy where someone always wins so you just have to calculate what the average person will win and make sure it’s less than what each episode earns. On other game shows, most people don’t win anything, so they can save money by making the game more difficult.
An additional little bit of knowledge:
When a game show has an especially large but unlikely amount available for contestants, such as $1 million, they’ll set up a prize indemnity insurance policy instead of setting the money aside. The important thing there is that the odds of someone winning that full amount are so small that the insurance company doesn’t consider it a high risk prospect.
When *Who Wants to be a Millionaire* first began airing many years ago, their insurance company threatened to back out of their deal with ABC because contestants were winning way too often. The show had to start making the questions harder so that it would be less likely for people to get the full amount, putting less pressure on the company.
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