WSJ: Amazon spends record-breaking $715 million on Lord of the Rings: The Rings of Power

With its upcoming "Lord of the Rings: The Rings of Power," Amazon has shot an arrow through previous records for TV-series expenses. The Wall Street Journal reported Friday that the fantasy property’s first season will cost a cool $715 million.

Almost a third of that comes from the $250 million rights agreement Amazon inked in 2017 with Warner Bros. and the estate of Lord of the Rings author J.R.R. Tolkien — an eye-watering figure that Forbes’ Rob Cain observed at the time was 1,000 times what Tolkien got when he sold movie and merchandise rights to United Artists in 1969.

But production costs for the first season’s eight episodes — all shot in New Zealand under pandemic restrictions — have tacked on another $465 million.

The resulting $58 million and change per episode almost doubles the per-show cost of what seems to be the previous record holder: the fourth season of Netflix’s "Stranger Things," which the WSJ reported in April ran $30 million per episode.

The $465 million first-season cost surfaced last year, when New Zealand news sites cited government data about the rebate Amazon would earn based on its production expenses.

The WSJ story notes how precious this project was to Amazon’s then-CEO Jeff Bezos. It notes that he “once led a summer camp for younger neighbors with a reading list that included ‘Lord of the Rings’,” adding that Bezos personally worked on the pitch that won over the Tolkien estate and Warner against a competing offer from Netflix.

But an analyst suggested that even an expense this steep need not equate to throwing Amazon’s content balance sheet into a financial equivalent of Tolkien’s Mount Doom volcano.

“Amazon will be looking to establish a media franchise, not just a single series,” wrote Brett Sappington, a vice president at the research firm Interpret, in an email.

Amazon committed to producing several seasons of "The Rings of Power," set thousands of years before the events chronicled in Tolkien’s classic "Lord of the Rings" trilogy, which Warner turned into a series of blockbuster movies that grossed almost $3 billion at the box office.

But with that legacy in the minds of fans — as well as the high quality of those movies — Amazon also can’t afford to miss its target when the series debuts on Prime Video starting Sept. 1.

“The first content created out of the series is critically important to its long-term future as a franchise for Amazon,” Sappington commented. “If Amazon flopped in its first steps into Middle Earth, it would have an uphill climb to win fans in the future.”