TBI Tech & Analysis: Exploring the soaring cost of content

Stranger Things

As competition in the subscription streaming market heats up, production budgets are getting bigger. Omdia’s Tim Westcott weigh up the most expensive TV shows in the US and Europe and explores whether heavy investment buys success with viewers.

Spending on TV shows has soared in recent years, most recently highlighted in today’s Screen Business report from the British Film Institute (BFI), which found that high-end television (HETV) production spending on shows such as The Virtues, Quiz and Bodyguard increased from £1.23bn ($1.63bn) in 2017 to £2.08bn in 2019.

This beat the £2.02bn spent in that year on film but also contrasts the spend of £392.8m on TV in 2013, when the High End Tax Relief was introduced. Much of the recent spending has come from overseas buyers, with £482.4m contributed by domestic UK productions in 2019 and just under £1.60bn – 76.8% of the total – by inward investment and co-production spend.

So just how do production budgets stand in Europe and North America? And do those high cost shows provide a return in terms of viewership?

Biggest budgets

• Scripted budgets have soared over recent years as the launch of new D2C services
  drives demand for premium product.
• Amazon’s upcoming Lord Of The Rings series could cost around $650m over the
  five seasons planned.
• The retail giant reportedly spent $250m alone to claim rights to the Tolkien classic,
  with a likely conservative estimate of $10m to be spent on each episode.
• On a per-episode basis, Disney spent more on Falcon And The Winter Soldier and
  Wandavision.
• Apple reportedly spent up to $15m on Jason Momoa’s drama See.

Netflix production costs

• Netflix is spending across the budget spectrum, but many of its ex-US productions are low budget, and its latest hit Squid Game is reported to have a cost a relatively modest $21m.
• Two seasons of sci-fi series Sense8, meanwhile, are believed to have cost $216m overall.
• Red Notice, Martin Scorsese’s epic The Irishman and action movie 6 Underground are believed to be the most expensive one-off shows.
• The streamer also committed to two seasons of The Crown upfront, which came in at a total of $130m for 20 episodes.

Biggest budgets TV (Europe)

• European production budgets are lower than the norm in Hollywood, but the gap is closing.
• Omdia’s research indicates BBC/HBO co-production His Dark Materials is the costliest so far, averaging $9m an episode over the first two seasons.
• The Crown’s last two seasons, produced by Sony’s Left Bank Pictures in the UK, averaged $7.5m an hour.
• Seasons 1 and 2 of Sky/ARD production Babylon Berlin cost $62m overall, or $3m an episode.

Netflix viewing

• Obviously, there is more to creating hit content than spending a lot of money—but
  it can definitely help. Stranger Things’ second season launched in 2017 and cost $8m an episode.
• PlumResearch data shows the season peaked with 107m views in 4Q17 and 137m
  in 3Q19 after the launch of season 3.
• Shonda Rhimes’s costume drama Bridgerton also repaid its investment with 98m views in 1Q21.
• 6 Underground, The Irishman and The Witcher also performed well on debut.

The analysis above, using PlumResearch data, was written by Omdia’s senior principal analyst for digital content & channels, Tim Westcott. To find out more, click here.