---
type: claim
domain: entertainment
description: "Straight-to-series ordering changed TV risk from 5-10M pilots to 80-100M season commitments while top 10 titles drive 50-80 percent of subscriber additions -- the industry needs VC-style portfolio math not PE-style conviction bets"
confidence: likely
source: "Doug Shapiro, 'You Can't Just Make the Hits', The Mediator (Substack)"
created: 2026-03-01
---

# the TV industry needs diversified small bets like venture capital not concentrated large bets because power law returns dominate

Shapiro identifies three structural changes that increased risk in TV production simultaneously. First, straight-to-series ordering (pioneered by Netflix) changed the minimum bet from $5-10M for a pilot to $80-100M for a full season. This was rational for Netflix -- they needed volume to build a library -- but it fundamentally altered the risk profile for the industry. Second, cost-plus deals shifted risk from sellers (showrunners, studios) to buyers (platforms). Previously, talent bore residual risk through backend participation; cost-plus eliminated that alignment. Third, since [[information cascades create power law distributions in culture because consumers use popularity as a quality signal when choice is overwhelming]], value has concentrated in fewer hits -- the top 10 titles on streaming services drive 50-80% of gross subscriber additions.

The combination creates an industry making fewer, larger bets in a winner-take-all market -- exactly backward. Shapiro argues the TV industry needs to think more like venture capital (diversified portfolio of small bets, expecting most to fail but a few to generate outsized returns) and less like private equity (concentrated large bets with conviction in each one). The math is clear: in a power law distribution, prediction is unreliable so the optimal strategy is maximum shots on goal at minimum cost per shot.

This framework validates the community-first IP incubation model. Instead of spending $100M on a show and hoping audiences materialize, the VC approach tests content cheaply on social media, identifies what resonates, and scales only proven winners. This is exactly the approach where since [[GenAI is simultaneously sustaining and disruptive depending on whether users pursue progressive syntheticization or progressive control]], progressive control enables -- independent creators can produce and test concepts at near-zero cost, treating each as a small bet in a diversified portfolio.

Shapiro also distinguishes franchise fatigue from franchise commoditization. The problem with superhero movies is not that audiences are tired of franchises -- it is that overexploitation dilutes IP value. Franchise commoditization is a supply-side problem (too many sequels degrading brand), not a demand-side problem (audiences losing interest in franchise entertainment). This matters because it means franchise models work, but only when IP is cultivated rather than strip-mined. Since [[value flows to whichever resources are scarce and disruption shifts which resources are scarce making resource-scarcity analysis the core strategic framework]], premium IP remains one of the scarce resources -- but only if managed as a platform rather than a commodity.

---

Relevant Notes:
- [[information cascades create power law distributions in culture because consumers use popularity as a quality signal when choice is overwhelming]] -- power law returns make prediction unreliable which demands portfolio diversification
- [[GenAI is simultaneously sustaining and disruptive depending on whether users pursue progressive syntheticization or progressive control]] -- progressive control enables the VC-style small-bet approach
- [[value flows to whichever resources are scarce and disruption shifts which resources are scarce making resource-scarcity analysis the core strategic framework]] -- premium IP remains scarce but only when cultivated not strip-mined
- [[streaming churn may be permanently uneconomic because maintenance marketing consumes up to half of average revenue per user]] -- high churn rates make the large-bet model even more dangerous because shows need to drive subscriptions not just viewership
- [[five factors determine the speed and extent of disruption including quality definition change and ease of incumbent replication]] -- the VC model is hard for studios to replicate because their cost structures and organizational culture demand large concentrated bets

Topics:
- [[competitive advantage and moats]]
- [[web3 entertainment and creator economy]]
