As tech giants take on the traditional entertainment industry, committing billions of dollars to spending on original content, e-commerce and cloud computing giant Amazon.com Inc. (AMZN) hopes to shine against its growing number of competitors with a new "Lord of the Rings" television series.
In attempts to produce a "Game of Thrones"-level hit series, Amazon grabbed rights to the popular "LoTR" empire last year. The Seattle-based company made an initial $250 million deal brokered between New Line Cinema and the Tolkien Estate, just barely beating out on-demand streaming giant Netflix Inc. (NFLX). The contract requires Amazon to start production of the series within two years and run the show for five years. (See also: Amazon to Produce New ‘Lord of the Rings’ Series.)
Doubling Down on Content Spending
According to The Hollywood Reporter, the five-season commitment to the "LoTR" show could cost Amazon upward of $1 billion, factoring in casting, producers and visual effects. If the estimate is correct, the new series would cost about three times than that of the original film trilogy just a decade ago. The TV adaptation, which takes place in fantasy Middle Earth, would become the most expensive television show ever made.
The news reflects a larger content push in the media industry as streaming services threaten the position of traditional film distributors and cinema stakeholders. Netflix, which spent $6.3 billion on programming in 2017, plans to shell out $8 billion on new and original content this year, and has seen its investment pay off with its handful of high-flying original series.
The Walt Disney Co. (DIS), which cut its ties with Netflix last year and announced plans for its own direct-to-consumer platform by 2019, is expected to spend as much as $30 billion annually on its video-streaming push, according to analysts at RBC Capital Markets. In 2017, Amazon spent $4.5 billion on content, while Hulu, which successfully created a buzz around its platform by winning a handful of prestigious awards, invested $2.5 billion. HBO owner Time Warner Inc. (TWX) and 21st Century Fox Inc. (FOXA) both spent $8 billion last year on non-sports content. (See also: Bezos: Amazon Needs Its Own 'Game of Thrones'.)