The Streaming Show That Cost A Billion Dollars For Just Two Seasons

Hollywood has been left reeling after it emerged in company filings that one of the most-hyped streaming shows in history actually cost $1 billion to make despite widespread reports claiming that it was 60% cheaper than this.

Since the world was sent into lockdown in the pandemic, Hollywood’s biggest studios have been locked in an arms race against each other as they attempted to outspend their rivals on content in a bid to boost subscriptions to their platforms.

With more than 300 million paid subscribers, Netflix has comfortably won that crown and is now taking on the traditional studios at their own game with an $82.7 billion purchase of Warner Bros. The streamer has committed to keeping theatrical releases for Warner Bros.’ movies but critics are concerned that it still signals a shift away from the silver screen. So too does the staggering investment in streaming shows and when it comes to spending on a single show, one studio rules them all.

For the best part of the past five years tech giant Amazon has been on a quest to take on Hollywood’s establishment and no expense has been spared. In March 2022 it paid $8.5 billion for storied movie studio MGM despite it reportedly being valued at between $3.5 billion and $4 billion.

That gave it access to the iconic James Bond franchise but Amazon couldn’t freely develop it as longtime stewards Barbara Broccoli and Michael G. Wilson were in charge. It had to whip out its wallet again to wrest creative control of the the spy series from them. Cutting no corners, Dune director Denis Villeneuve was hired to helm the next instalment in the franchise but Amazon isn’t putting all its eggs in that basket.

Following the MGM acquisition, Amazon commissioned a slew of exclusive content. As the following reports revealed, it is spending hundreds of millions of dollars on movies based on IP from most major genres.

Bond will be joined by a live-action film based on beloved 1980s toy He-Man as well as a big budget reboot of the Thomas Crown Affair led by Michael B. Jordan. Ryan Gosling will star in new sci-fi epic Project Hail Mary while American author Don Winslow’s novella Crime 101 is being turned into a blockbuster detective drama featuring Chris Hemsworth, Mark Ruffalo, Halle Berry, Jennifer Jason Leigh, Barry Keoghan and Nick Nolte.

Amazon is even hoping to corner the children’s movie market with The Sheep Detectives. That film too has a cast list which reads like a roll call for the Oscars with Hugh Jackman in the lead role alongside Emma Thompson, Patrick Stewart, Bryan Cranston and Nicholas Galitzine.

The action comedy is based on a 2005 novel which became an international bestseller and has been translated into more than 30 languages. This pedigree should make it a safe bet but Amazon has upped the ante. As this report revealed, it spent $82.1 million on production in 2024 alone, nearly a year and a half before the movie is due to be released. This sets a high barrier for success but Amazon has a trick up its sleeve.

Known in the industry as tentpole productions, they are movies which make so much profit that they can outweigh the losses generated by by riskier, but often more critically-acclaimed, productions. Bond and He-Man head the roster for MGM while tentpoles are even more important for Amazon’s streaming service Prime Video.

Streaming platforms don’t tend to charge for each show as they offer subscribers access to all their content for a flat fee so the profit of each production can’t be calculated. It places great importance on streaming tentpoles which are designed to draw in subscribers and boost revenues. They don’t come cheap.

Before streaming was commonplace, Warner Bros.’ HBO kicked off this trend in 2011 when it debuted fantasy series Game of Thrones. Netflix followed suit two years later with the smash hit political thriller House of Cards and within a few months of Disney+ launching in 2019 it featured streaming shows based on its hugely-popular Star Wars and Marvel franchises.

So when Amazon entered the fray with its Prime platform it needed a production which packed even more of a punch. In 2017 it forked out an estimated $250 million for the television rights to The Lord of the Rings following the success of Peter Jackson’s series of six movies based on the books by British author J.R.R. Tolkien. They grossed a combined $5.9 billion, according to industry analyst Box Office Mojo, and Bezos smelled even more money.

He saw an opportunity to create a Lord of the Rings spinoff show which could take on Game of Thrones and commissioned five seasons of it. Called The Rings of Power, in 2018 The Hollywood Reporter put its total cost at $1 billion.

Set before the time of Tolkien’s books, season one debuted in 2022 and, like the blockbuster movies, it was filmed in New Zealand which lifted the curtain on how much it cost to make. The costs of streaming shows are usually a closely-guarded secret as studios combine them all in their overall expenses and don’t break out how much was spent on each one. Shows made in New Zealand are an exceptions as its government reimburses 20% of the money that studios spend in the country. The studios set up separate production companies for each one in order to show how much was spent on each one and their filings shine a spotlight on the spending.

The company behind season one of The Rings Of Power was GSR Productions, a subsidiary of Reunion Pacific Entertainment, the Canadian company which created the series for Amazon. Filings from the New Zealand Film Commission reveal that the qualifying production expenditure on the first season of the show hit $434.4 million (NZ$683.9 million) with the 20% rebate coming in at $86.9 million (NZ$136.8 million).

The enormous cost was partly thanks to the show’s extravagant effects which digitally recreated fantasy fights in fairytale settings. More than 20 visual effects studios worked on the show including Weta FX which won multiple Oscars for its work on the Lord of the Rings movies.

The vibrant visuals continued in the second season which was shot in the United Kingdom and debuted in August last year. The Tolkien estate reportedly wanted the show to be shot in the U.K. all along as the country inspired the original books. Amazon was so captivated by the U.K. that in July last year it acquired the film studio near London which was home to production of the second season.

Like New Zealand, the U.K. also offers studios a fiscal incentive for filming there. They get up to 25.5% of their costs reimbursed and, until last year this came in the form of a cash tax credit but it is now counted as revenue. The key condition of receiving it is that at least 10% of the core costs of the production have to be incurred in the U.K. and in order to demonstrate this to the authorities, studios set up separate companies to produce each streaming show they make there.

Last year this author revealed in the Daily Mail that according to the financial statements for GSR UK Productions, the production company behind The Rings of Power, by the middle of 2023 the cost for both seasons of the show had hit $800 million. However, that was just the start as the second season debuted more than a year after the date of the filings and during that time much of the costly digital effects work was done.

Accordingly, the company’s latest financial statements reveal that the spending on season two has surged even higher. They show that by the end of June last year, two months before its premiere, $568.1 million (£451.1 million) had been spent on it bringing the total for both seasons to $1 billion. In stark contrast, Disney spent $705.5 million (£552.7 million) on both seasons of its Star Wars spinoff Andor while the single season of Marvel’s Secret Invasion show seems relatively cheap at $234.2 million (£204 million).

Surprisingly, Rings of Power didn’t overspend as the filings reveal that the cost was “in line with the agreed budget.” They add that it banked $114.3 million (£90.5 million) in reimbursement and tax credits. This didn’t just have a magic touch on the show’s bottom line. Studios spend on local services such as technicians, props manufacturers, car hire and catering. Filming also keeps local workers in jobs and the financial statements show that staff working on The Rings Of Power peaked at a monthly average of 522 employees with their pay coming to $40.2 million (£31.9 million).

The total spending gives the show a massive cost of $62.5 million for each of its 16 episodes. This comes to $912,408 per minute which is almost as much as the $1.3 million (£1 million) per hour minimum threshold required in order to qualify for the reimbursement. It remains to be seen whether it has paid off.

Only 37% of viewers in the United States who started the first season were still watching by the end according to the Hollywood Reporter. The second season wasn’t much of an improvement. A report from analytics firm Samba TV showed that within four days of its debut, the first episode was watched by 900,000 U.S. households which is about half as large as the audience for the first season’s pilot.

The show also found itself in the middle of a storm as the diversity of its cast angered die-hard fans of the books who claimed that it compromised the integrity of the original material. The controversy contributed to audiences rating the two seasons an average of 49% on review aggregator Rotten Tomatoes while Game Of Thrones hit 85%.

By the time that the third season debuted in August last year rumours swirled that Amazon could pull the plug on it. However, this was denied by screenwriter Patrick McKay while business title The Ankler added that cancelation was unlikely as Amazon would have to pay a $20 million kill fee to Tolkien’s estate for any of the five seasons that it abandoned.

The lukewarm reception may not actually matter. “The main purpose of Prime (alongside peripheral things like making the overall Prime subscription even more stickier for consumers) is to sell third-party video subscriptions and rent films – original Prime content is a hook to get viewers there in the first place,” explains Tom Harrington of media researchers Enders Analysis.

Tom Forte, media analyst at Maxim Group, adds that “overall, we see Amazon’s video strategy as similar to its e-commerce one. The company is focused on the long term and building a large business and willing to invest and lose money, on a short- and near-term basis. We consider its Lord of the Rings effort as one of its tentpole content initiatives. Its Thursday Night Football (TNF) is another tentpole example, where it is reportedly paying $1 billion a year for licensing plus tens of millions, and possibly more than $100 million, on production, including talent.”

He concludes that “to the extent these tentpole efforts increase its ability to be, ultimately, successful they should be deemed risky, but successful initiatives.”

In short, the show’s total audience isn’t as important as the hype that it generates and in this regard, there’s little doubt that The Rings of Power has cast a powerful spell.

Additional reporting by Chris Sylt