The streaming service wars are heating up. As  we reported a week ago, Amazon was in talks with the Tolkien Estate and Trust for the rights. At the time, it was unclear what form such a series would take. It was unlikely that it would be a remake of the hugely successful Trilogy. Amazon’s formal announcement reveals that the series will take place before the events of Lord of the Rings. They will likely precede even The Hobbit.

The production will will be produced by Amazon Studios in cooperation with the Tolkien Estate and Trust as well as HarperCollins, the publisher of Tolkien’s works. New Line Cinema, a division of Warner Bros. Entertainment, is also taking part. New Line produced the cinematic LOTR movie franchise. Matt Galsor, a representative for the Tolkien Estate and Trust and HarperCollins said, “We are delighted that Amazon, with its longstanding commitment to literature, is the home of the first-ever multi-season television series for the Lord of the Rings.” He continued, “Sharon [Tal Yguado] and the team at Amazon Studios have exceptional ideas to bring to the screen previously unexplored stories based on J.R.R. Tolkien’s original writings.”

Content Will Rule Them All

In light of Disney’s move to build its own robust service, original content will be king. In the increasingly competitive — and crowded — field, services will have to have something unique to attract subscribers. One tactic is exclusive content. Disney achieves this by moving its film library to its own platform. Netflix and Amazon have leapt ahead of  other challengers in the market by producing their own shows.

For competing services, the option of lower fees will only take them so far. The resulting reduced income limits what can be licensed. In the absence of owning an expansive library, the only viable option is to create original material. As fan films have shown, original content does not equal big budgets. Before YouTube, the classic Star Trek and Dr. Who series were produced on budgets that would barely cover the craft services bill these days. The challenge of the Information Age is to create material that stands out. Having deep pockets doesn’t always equal success, but it makes it more likely.

Smaug Would Be Proud

The Tolkien Estate had been shopping the rights to multiple potential partners. In addition to Amazon, they approached both Netflix and HBO. The latter has a proven track record with multi-season, epic fantasy shows with Game of Thrones. Additionally, HBO is likely to be on the lookout for a successor as GoT’s last season approaches.

The prestige of producing an award-winning show like GoT converts to dollars by bringing in subscribers. However, producing such a series is not for the faint of heart or the small of budget. Each of Season 7’s episodes cost a reported $6 million with next season running $15 million each according to some.

The Tolkien estate asked over $200 million for the television rights to Lord of the Rings. While Amazon is not saying how much it actually paid, industry insiders claim it was $250 million. This is in addition to the cost per season of $100-150 million. Given that the original trilogy earned over $3 billion globally at the beginning of this century, a successful journey to Middle Earth could be quite profitable.

Amazon’s Motivation

Amazon Studios’ annual budget is $4.5 million to acquire and produce its titles. It won three Academy Awards for its shows earlier this year. It came up at the Emmy Awards, ironically losing to shows that it had passed on; Hulu’s Handmaid’s Tale and HBO’s Big Little Lies. The latter won eight Emmies.

Furthermore, there has been internal turmoil. In late October, Amazon fired the executive in charge of its Studios division over sexual harassment claims. Shortly afterwards, it parted ways with the head of Scripted Series, reportedly for pressuring producers to cast his girlfriend in The Tick.

Sharon Tal Yguado is the new head of Scripted Series and she was reported to have been instrumental in completing the deal. Still, the acquisition of Lord of the Rings, with an option for a second spin-off series, is a departure for the studio. Since its start in 2010, the studio focused on smaller, critically acclaimed series such as Transparent and The Man in the High Castle. Amazon’s ultimate goal is to build its $99 a year Amazon Prime customer base. While some will come for the movies, Amazon hopes that they’ll also buy the popcorn and the big screen while they’re at it.

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