Why Amazon Just Spent a Fortune to Turn ‘Lord of the Rings’ Into TV

Amazon has acquired the television rights to J.R.R. Tolkien’s fantasy series The Lord of the Rings. With this deal, which industry publications estimate at being worth $250 million, Amazon can use the classic Middle-earth mythology as a canvas for several different TV shows, including backstories of beloved characters like Aragorn.

The gargantuan deal is perhaps the most important event in the history of Amazon’s television business. It carries major implications for the streaming wars with Netflix, Hulu, and (soon) Disney, as well as critical lessons for business strategy in an age of content abundance.

First, the deal signals an abrupt turn for Amazon. Five years ago, the company announced that it was getting into the movie and TV business. But rather than transform the entertainment industry the way it has ransacked e-commerce, Amazon has remained a sideline player, despite spending more than $4 billion a year on content. Rather than home runs, like Game of Thrones and Stranger Things, the company’s slate is full of minor hits, like Transparent, and a lot of outs. Complicating matters, in October, the company’s head of film and television, Roy Price, quit amid several allegations of sexual harassment.

In recent months, the Amazon CEO Jeff Bezos has insisted that the company focus on securing a hit show on par with HBO’s Game of Thrones. With this Lord of the Rings deal, he secures the rights to an even more popular epic fantasy—just as HBO’s juggernaut is set to end its run.

The upfront costs of $200 million to $250 million, however, might seem staggering, consider that the figure doesn’t include a production budget, which could be more than $150 million per season, or tens of millions in potential marketing costs. All told, Amazon could wind up paying half a billion dollars before anybody …read more

Source:: The Atlantic – Business

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