The latest so-called Golden Age of TV—which had come to be defined by the “difficult men” (paywall) of The Sopranos, The Wire, Breaking Bad, and more—is over. Is TV better now? Probably not. But it’s certainly more expensive.
Take Netflix. Baz Luhrmann’s nostalgic hip-hop series The Get Down was made for a price tag of more than $11 million an episode. And the period drama The Crown, which is now being called the most expensive show ever made, is said to cost a whopping $13 million an episode. Compare that with HBO’s 1999 mob drama The Sopranos, which reportedly cost $2 million an episode when it was first made.
TV shows are becoming more expensive to produce because there are more companies vying for the content, with newer subscription-based entrants in streaming video like Netflix and Amazon and online cord-cutting services for traditional pay-TV networks like HBO. They’re willing to spend more for content because their business models are built on getting subscribers to pay for their libraries of exclusive and licensed content month after month after month.
Looking at some of the most expensive TV shows ever made, many of them were disproportionately developed in the past five years by networks like Netflix and HBO.
Programs like E.R., Frasier, and Friends commanded hefty prices in their heyday because they started with lesser-known talent that became more famous, and therefore more expensive, over the 10-or-so-year lifespans of the shows. E.R. became the most expensive program on TV in 1998 because of George Clooney’s contract. Now, shows like Netflix’s House of Cards are locking up expensive talent from the start.
Built on a house of cards
When Netflix began its transition from a library of licensed content to a content owner in its own right in 2013, the streaming service came out of the gate with the political drama that cost an estimated $4.5 million an episode. The show, created by Lionsgate, was hugely expensive for a company that was just beginning to delve into originals.
“They knew that if they really wanted to succeed here they really had to hit out of the park,” Jim Nail, a media analyst at Forrester Research, tells Quartz. “They just were not viewed in that same competitive tier as the broadcast networks and the movie studios… I would not be surprised if they made a very strategic decision to not take any chances.”
The show was a success and became the gold standard for Netflix programming. Its subscribers learned to expect not only quality content, but blockbuster production values. “They’ve in some ways backed themselves into a corner,” Nail said. “They managed to lure people. But once these shows are over they’ve got to keep feeding them this amazing content.”
Netflix plans to invest $6 billion on content next year. HBO is expected to spend about $1.8 billion this year, a 20% bump from 2015. And Amazon upped its content budget as well; it’s on a similar path, with free-spending The Grand Tour, and Mad Men creator Matthew Weiner’s next project and the David O. Russell-directed series starring Robert De Niro and Julianne Moore to come.
This in turn has forced traditional players to spend more. The pilot of HBO’s new J.J. Abrams-produced drama Westworld, for example, reportedly cost a staggering $25 million—with a $100 million budget for the 10-episode season.
Creators are reaping the rewards
This creative arms race is boosting the value of content creators. The number and value of deals in the film and entertainment space soared through the third quarter of this year compared to 2015, an analysis by PwC found—largely because of mega-deals targeting cable- and premium-TV networks, like Lionsgate’s acquisition of Starz, and film studios like DreamWorks Animation. But there were also more smaller deals targeting TV, documentary, and short-film producers—15 so far this year, up from two as of the third quarter last year.
“Companies and market players have ascribed a real value to content and as a result you’re seeing significant deals in the content-creation space,” said Bart Spiegel, entertainment and media partner at PwC. “While the size of the deal values may ebb and flow, you’re going to see continued interest in this sector.”
The question remains whether the economics behind such exorbitant spending by subscription-based services like Netflix and its rivals will remain viable as member growth slows over time.
“How long can you stay on that treadmill?” asked Nail of Forrester.