In our previous blog, The History of Television in the Era of Video, we traced how video technology evolved—from the first moving images to today’s streaming-dominated landscape. As video technology advanced, it reshaped not just the medium but also the way we consume and value content. These changes are forcing television to rethink its business models, driven not only by technological shifts but also by changing cultural and societal expectations.
The goal of this new blog is to focus on the history of the television business, examining how the industry has generated revenue over time. From government-funded broadcasts and advertising-supported networks to modern subscription-based streaming services, we’ll explore the strategies that have driven television’s profitability.
1. The Early Days: Public and Subscription TV (1930s–1950s)
Advertising Takes Root
In its early years, television was primarily a public service. In countries like the UK, the BBC, established in 1927, always operated as a publicly funded broadcaster, relying on license fees rather than commercials. Other examples are NHK (Japan), ARD (Germany) or ABC (Australia).
In the U.S., however, things took a different turn. By the late 1940s, private TV channels emerged, ushering in the era of television advertising. Networks like CBS and NBC began selling ad slots during programs, allowing companies to reach audiences directly in their homes.
Type of Advertising:
Advertisements in this era were often straightforward, highlighting the product’s novelty and benefits. Many were performed live, with presenters or hosts promoting the product during the broadcast itself, seamlessly integrated into the programming. These live ads were delivered as part of the show, making them a natural extension of the content viewers were already watching.
The first-ever TV ad was aired on July 1 in 1941, NBC’s WNBT station, just before a Brooklyn Dodgers vs. Philadelphia Phillies baseball game. The 10-second commercial for Bulova watches featured a clock over a map of the U.S. with the tagline, “America runs on Bulova time.” Bulova paid just $9 for the spot.
2. The Golden Age of TV Advertising (1950s–1970s)
Network Advertising Dominance:
As television became a household staple in the 1950s, advertising skyrocketed. Networks sold prime ad space during popular shows to national and local businesses. Nielsen ratings became the standard measurement for determining the cost of these slots, as advertisers wanted to reach the largest audience possible.
That means that the model during the Golden Age of TV advertising was primarily based on reach. Advertisers paid more for prime time slots because they wanted to maximize exposure to the largest audience possible. In other words, the more viewers a show had, the higher the cost of ad space. Nielsen ratings determined the audience size and, in turn, the ad price. It was all about getting the brand in front of the most eyes.
Sponsorship and Product Placement:
Entire shows were often sponsored by a single company, giving them branding rights and exclusive promotion opportunities. For instance, “The Texaco Star Theater” was fully sponsored by Texaco, making the brand synonymous with the show itself.
Type of Advertising:
Ads during this period were characterized by jingles, slogans, and repetition, aimed at embedding brands into the minds of viewers. Product placement within shows also emerged, allowing brands to subtly integrate their products into popular TV narratives, an early form of embedded advertising.
One of the standout ads from this era was Coca-Cola’s “Hilltop” commercial in 1971. It showed people from all over the world singing “I’d Like to Buy the World a Coke” on a hilltop, pushing a message of unity and peace. The ad hit home with viewers worldwide, turning into an iconic piece of TV history and cementing its place as one of the most effective commercials ever.
3. Cable and Satellite TV Expansion (1970s–1990s)
Cable Subscriptions Meet Targeted Ads:
With the advent of cable and satellite TV, new channels emerged, many of which relied on subscriptions as a primary revenue source. However, advertising continued to thrive. Cable networks started to offer advertisers more targeted opportunities to reach specific audiences.
Back then, networks started breaking out regional ads. With cable, they used ‘cue tones’ in the video to signal when a local ad break was coming. So, during a typical 3-minute break with six 30-second ads, you’d get four national spots—like a FORD commercial showing the latest car model—along with two local ads specific to each region, such as promotions for local FORD dealerships.
Pay-Per-View and Syndication:
While subscription fees provided stable income, advertising remained crucial for cable networks. During this period, subscription revenue accounted for about 40–50% of total cable TV revenue, while advertising typically contributed the remaining 50–60%. As the cable industry grew, particularly with the expansion of premium channels and pay-per-view options, subscription fees became more reliable. However, local ad revenues, especially for cable networks, continued to play a key role, particularly as cable systems began to include local ad slots alongside national ads.
Pay-per-view events brought additional revenue, often including promotional spots for future events or products. Syndication allowed networks to rerun popular shows, often including new ad slots.
Syndication in TV refers to the practice of selling the rights to rerun a show to different networks or stations after the original broadcast, which allowed advertisers to buy new ad spots on these reruns. It wasn’t directly related to demographics but more about maximizing a show’s reach and ad revenue by targeting different markets with local ads.
Type of Advertising:
With a broader variety of channels, and more narrow interest, cable allowed for more niche advertising, targeting specific demographics based on the content of the channel. Ads became more varied in tone, length, and style, catering to both broad and particular audiences.
A successful niche ad aired during the 1990s on cable channels like ESPN or Outdoor Life Network (OLN) was the Bass Pro Shops fishing gear campaign. This ad targeted avid fishing enthusiasts, resonating with a specific demographic, by showcasing high-end fishing rods, reels, and accessories available at Bass Pro Shops. The commercial was shown on channels dedicated to outdoor sports, fishing, and hunting, where the audience was more likely to be interested in purchasing specialized gear.
4. The Rise of Premium Channels and Home Video (1980s–2000s)
Premium Channels Limit Ads, But Others Adapt:
Premium channels like HBO and Showtime offered a new kind of viewing experience—one free from traditional commercials – consumers would pay a premium to access the content, rather than watching ads. Other networks adjusted by offering more personalized and engaging ads to compete with the ad-free environment.
By leveraging viewer data, they targeted specific demographics with relevant ads, such as car ads for automotive fans or tech ads for younger viewers. Interactive ads also became popular, offering features like “choose-your-own-adventure” or allowing viewers to request more information. Product placement grew, integrating brands naturally into show content, and brands began co-creating content with networks to make ads feel less like interruptions. These strategies helped maintain viewer engagement while avoiding traditional commercial breaks
Home Video Sales:
Home video sales, particularly from VHS and DVDs, became a significant revenue stream for networks and production companies in the 1980s and 1990s. By the late 1990s, the home video market was generating billions in revenue. For example, by 1999, VHS and DVD sales combined were worth around $23 billion annually in the U.S. alone.
However, despite the boost from home video, advertising remained essential for covering the costs of regular programming. Networks still relied on ad revenue, which accounted for around 60-70% of their total income, especially for shows that had higher production costs but lower direct home video sales
Type of Advertising:
Innovative formats such as infomercials began to appear, blending entertainment with advertising in longer formats. Ads also became more integrated with storytelling, especially with product placements in blockbuster TV shows.
A well-known successful example is The Slap Chop” infomercial, starring pitchman Vince Offer It used humor and a direct approach to demonstrate the product’s value, which helped it become one of the most successful direct-response ads of its time.
5. The Digital Revolution and Streaming (2000s–Present)
Digital Ads: The Age of Targeting:
When Netflix and Disney+ launched, they were ad-free to attract viewers to the new, on-demand viewing experience, especially on mobile and computers—channels not tied to traditional TV. This ad-free model was key to their appeal, offering a seamless viewing experience that was a clear break from the interruptions of regular TV ads.
It wasn’t until later that platforms like Peacock and Tubi added ad-supported models to provide cheaper alternatives. Initially, ad-free streaming was a big draw as consumers were still transitioning from traditional TV. Over time, streaming platforms began exploring ad-supported tiers to reach more price-sensitive viewers and boost revenue without sacrificing the ad-free experience for paying customers. Meanwhile, platforms with ads began leveraging hyper-targeted ads, taking advantage of viewer data to serve more personalized and relevant content
Hybrid Models:
Hybrid models, such as those used by Hulu and YouTube TV, offer a mix of subscription fees and advertisements, allowing users to choose between a cheaper, ad-supported plan or a more expensive, ad-free experience. For instance, Hulu offers a tiered pricing structure: its ad-supported plan is priced lower than the ad-free version, and Hulu has seen significant success with this model, largely due to its appealing content library.
As of recent years, a large portion of Hulu’s subscribers opt for the ad-supported version, which is cheaper and enables the company to monetize viewers who might not otherwise pay for a full subscription. On the other hand, services like YouTube TV follow a similar approach, offering both ad-free options for premium subscribers and ad-supported models for budget-conscious users.
The shift to hybrid models helps companies reach broader audiences, with certain demographics preferring low-cost, ad-supported access, while others opt for the ad-free premium experience.
Type of Advertising:
Advertising today is more tailored, but not always perfectly so. Programmatic ads are driven by real-time bidding, where advertisers bid for ad slots based on data, but it’s not an exact science. Ad breaks have become shorter, and while interactive ads are being experimented with—mainly on platforms like YouTube and Prime Video during live events—they’re still far from widespread adoption. The shift towards smarter advertising is happening, but we’re not yet at the point where interactive ads are common across all platforms.
A successful example from this period is the 2010 “Old Spice: The Man Your Man Could Smell Like” campaign. The ad, starring Isaiah Mustafa, was a viral hit thanks to its humor and fast-paced transitions. It engaged audiences through clever TV ads and real-time social media interactions, creating a buzz that drove both brand recall and sales. The campaign effectively combined traditional advertising with the growing power of digital engagement.
6. Current Trends and Future Revenue Streams (2020s Onward)
Interactive and Shoppable Ads:
Interactive and shoppable ads are definitely making waves, but the reality is more complex. While streaming services like Netflix or Hulu use data to personalize content and ads, traditional telcos often have deeper insights into users through mobile and broadband data, giving them an edge in targeting. This is also a big part of why the Direct-to-Consumer (DTC) model is so crucial for streaming services. By cutting out the middleman, platforms can not only control content but also get closer to their users—allowing them to refine ad targeting and content recommendations in a way that traditional TV simply can’t match.
Shoppable TV is making progress but still has a way to go before it reaches mass adoption. Some platforms are just starting to use features like clickable products directly on screen, bringing e-commerce closer to entertainment. At least we’ve moved past the clunky idea of scanning QR codes on screens—that was never going to be a winning solution! The future of shoppable TV looks promising, but it’s not quite here yet.
Global Streaming and Ad Localization:
As streaming platforms expand globally, ad localization is becoming increasingly important to cater to regional markets. In some cases, global streaming services rely on local expertise to manage inventory. It’s an example of a major streaming service working with the agency of a TV channel to handle ad sales. The partnership leverages the agency’s deeper knowledge of local markets and connections with regional brands, which helps target ads more effectively. This trend not only ensures more relevant ads for viewers but also opens up new revenue streams for both global streaming services and local advertisers.
Such models are becoming more common as streaming platforms aim to blend global reach with localized advertising to meet regional demands.
Type of Advertising:
Expect to see more immersive, interactive experiences. Whether through clickable ads, personalized offers, or shoppable content, TV advertising is moving beyond the static commercial break into something dynamic capable of blending ecommerce in.
A great example of interactive advertising is Nike’s “Nike Training Club” platform. More than just an ad, NTC offers free fitness content, including workouts and educational resources. The app integrates shoppable features, allowing viewers to purchase Nike products directly while following along with the workout. This seamless blend of entertainment, educational and e-commerce creates an engaging experience that goes beyond traditional advertising, offering a personalized, on-demand shopping experience within the content itself.
Similarly, Amazon’s Prime Video ads during live events like the NFL also exemplify the direction TV advertising is headed—offering viewers the chance to click through for more content or exclusive deals without leaving the screen. These ads not only capture attention but actively engage users, increasing the likelihood of interaction and conversion.
Conclusion - Advertising: Still the Engine of TV Revenue
Television’s evolution from ad-supported beginnings to today’s subscription-based and hybrid models shows its ability to adapt and innovate. Despite shifts in technology and viewing habits, advertising remains a cornerstone of the TV industry’s revenue. In fact, it has proven its re/silience by evolving alongside new formats like addressable TV, which makes ads even more effective by targeting viewers with precision.
To understand how advertising continues to drive the TV ecosystem and shape sales strategies, check out Broadpeak.io’s blog post on The Power of Addressable TV: How Money Flows Are Reshaping Sales Strategies in the Advertising Ecosystem.
How will you fit into TV’s future revenue?
