How Netflix and Amazon Prime Video are changing the economics of TV with The Crown and The Grand Tour

Streaming services and co-productions are bringing huge budgets to the small screen
Lavish: Netflix's period drama The Crown is thought to have cost £100 million
Robert Viglasky/Netflix
James Ashton30 November 2016

It boasts sprawling replicas of Buckingham Palace and Downing Street, an A-list cast, more than 20,000 costumes, a steam train and a bad-tempered elephant. Spotting where the money was lavished on The Crown, Netflix’s £100 million regal drama, is not hard.

Director Stephen Daldry, best known for hit movies Billy Elliot and The Hours, prefers not to get carried away by the size of the cheque written by the streaming service, which put him at the helm of the most expensive TV series ever made.

“In a sense we didn’t really approach it as a TV show, we approached it as a 10-hour film,” he says of his chronicle of the early reign of the Queen. It was released to subscribers earlier this month and has fast become essential viewing. “On that basis you could say that it is actually rather a modest budget if you are looking at it as a movie budget.”

Despite the expense, broadcasters and online content providers such as Netflix and Amazon agree that, where TV drama is concerned, the numbers add up. Millions has been poured into the genre, once the poor relation of movie drama, to launch new services and keep regular viewers loyal — and London’s production industry is booming on the back of it.

The Crown premiere

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The rule of thumb used to be that blockbuster movies cost £1 million a screen minute to make, against £1 million an hour for TV drama. The Crown, costing about £5 million an hour (the £100 million figure came about because Netflix made an initial two-series commitment) is not alone in closing the gap.

Baz Luhrmann’s Seventies-set hip-hop drama The Get Down, also for Netflix, reportedly cost £8 million an episode. A similar figure is being lavished on a new mafia-themed show starring Oscar-winners Robert De Niro and Julianne Moore that has just been picked up by Amazon Prime Video.

Such spending is impossible for terrestrial broadcasters to live with. But the new entrants have reinvigorated the genre and focused the minds of programme commissioners everywhere.

There were 416 hours of new UK drama on public-service channels last year, 45 more than the year before according to media regulator Ofcom. The BBC received plaudits earlier this year for The Night Manager, its adaptation of the John Le Carré novel starring Tom Hiddleston and Elizabeth Debicki, whose £3 million-an-episode cost was split with co-producers.

Tom Hiddleston in The Night Manager (BBC/The Ink Factory/Des Willie)
BBC

While a sumptuous one-off series can set the tone for an entire channel, “Strong franchises such as Doctor Who or Sherlock are particularly valuable because loyal fanbases can directly influence the power of on-demand services to attract and retain subscriptions,” says Tim Davie, chief executive of BBC Worldwide, which exports BBC shows. More than half its content sales are now drama, and in a catch-up TV world, telly bosses predict the genre has a longer shelf life than reality shows, many of which are on the wane as viewers tire of their predictable plotlines.

In their battle for eyeballs, Netflix and Amazon — which also splurged on ex-Top Gear trio Jeremy Clarkson, Richard Hammond and James May’s The Grand Tour — have been inspired by HBO, the US cable channel that first showed it was possible to drive subscription take-up without relying on sports rights.

Long before the Game of Thrones behemoth began rolling HBO dramas including The Sopranos, Band of Brothers and The Wire demonstrated that small screen storytelling could have big ambitions.

In becoming more cinematic, broadcasters hope their shows will travel internationally — crucial when they have such big budgets to cover. It is striking to think that web streaming only gained traction three years ago with Kevin Spacey’s version of House of Cards. Today, TV knows no borders — or time slots. So-called “appointment to view” TV is available around the clock.

So much activity means the industry is heading towards what experts are calling “peak TV” — more content being made for more money than ever before. In a recent report media research firm Enders Analysis cited figures compiled by America’s FX Networks which showed that 419 original scripted series aired on US broadcast, cable and online platforms last year, almost double the number of five years ago. By 2017, it could be 500, as US cable channels step up investment to match the newcomers. Even with time-shifting, binge-watching and tablet TV on the Tube, are their enough hours in the day? The answer is no — in the hunt for viewers many of these shows are being cancelled faster than ever too.

10 must-see Netflix Original series

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“They are just throwing everything at the wall and hoping something sticks,” says Enders analyst Tom Harrington. “It is not sustainable.”

The dramatic increase in production has fed through into higher prices. Dramas have become more lavish but there has been inflation in the price of the best talent, in front and behind the camera, leading to questions about how big shows can deliver a return. ITV flagged that profits would be flat at its studios division this year as it invests more heavily in blockbuster drama. The sellers do not appear worried, though.

“A few years ago, a producer or distributor was selling to a limited number of channel buyers, now the market is highly competitive, with multiple buyers at both a global and local level, many of whom are extremely well capitalised and not constrained by the need to demonstrate short-term returns,” says Davie. Programme-makers know they must still try harder.

“The bar is going incredibly high in terms of originality, and in a way that is what drives us,” says Helen Gregory, creative director of film studio group Pinewood’s new TV division, which will co-fund its own high-end dramas.

Over at Sky, the big winter serial is The Young Pope, a co-production with HBO and Canal+ that stars Jude Law. Head of drama Anne Mensah aims to commission work that differentiates the channel from the terrestrial broadcasters. Budgets are fixed to be “appropriate for the ambition of the show”, she says, adding: “Our producers look to put the money on the screen but they are not spending money for money’s sake.”

London’s creative industries have been well-placed to capitalise wherever that budget is expended. Already a global hub for film-making — with Pinewood and Leavesden studios playing host to the Star Wars and Harry Potter franchises — an increasing amount of TV work has been located here too. That is partly because big TV productions compete for the same set-building, costume-designing and technical skills as the movie studios. The weak pound has also helped, as has the tax relief on high-end TV shows introduced three years ago following the success of film tax breaks.

The Grand Tour- first look

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British Film Institute figures show that 63 high-end TV programmes began principal photography in the first nine months of the year, with a UK spend of £561 million. Of these, 25 were classed as inward investment or co-productions — worth £350 million. It all adds up to a scarcity of studios, explaining why Sadiq Khan last month co-commissioned a feasibility study into new film studios in Dagenham.

Away from drama, only natural history has the potential to captivate audiences in the same way — and eat money. A decade ago, Sir David Attenborough’s original Planet Earth cost around £1.6 million an episode. For the sequel, currently Sunday night essential viewing, which was filmed over three years in 40 countries, the budget is assumed to have rocketed. The on-screen talent is cheaper, even if coaxing it out in front of the cameras is not so simple.

Follow James Ashton on Twitter: @mrjamesashton

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