While we wait for the season three greenlight that is almost assuredly coming, I thought it would be good to go over why Game of Thrones is such a lucrative show for HBO. There have been several recent articles that covered this very topic.
First up, this Wall Street Journal article by John Jurgensen looks at the budget for this season.
With the ambitious “Game of Thrones,” spiraling costs are a risk. The reported budget for season one was about $60 million; costs increased by roughly 15% for season two, says Michael Lombardo, HBO’s president of programming.
Even with a 15% increase, there were some concessions required to make everything work.
“We came to [HBO] on bended knee to plead for more money,” says Mr. Benioff. The producers declined to discuss the scale and costs of the Blackwater sequence; inevitably it involved some concessions. Mr. Lombardo says a discussion around building nine ships ended with the decision to make one.
Despite that, the money that HBO did give David & Dan for that pivotal battle seemed to be more than enough for director Neil Marshall, judging by this quote in a recent Empire magazine article.
The Blackwater episode, as the director puts it, “is pretty much one long battle, on a much bigger scale than anything in Centurion. I couldn’t believe the scale of production value I had. It was as big, if not bigger, than most features I’ve done: 400 extras, costumes, horses, stunts, fires… We had a full-size galleon to play with and a green-screen set that was doubling as several other ships, and we were setting that on fire and throwing people overboard. Then there’s a Saving Private Ryan-like beach battle, with all these guys getting shot to pieces, an attack on a castle.”
So we know HBO is willing to spend some money, even if it isn’t an exorbitant amount. But why? Well, one reason is that fantasy, and this show in particular, is really exploding in popularity right now, as this recent CNN article from Joel Williams explains.
Season two of HBO’s epic fantasy drama “Game of Thrones,” the television adaptation of George RR Martin’s A Song of Ice and Fire book series, debuts this Sunday. Watching along with the die-hard fans that helped make the book series popular will be a hoard of new, not-necessarily-nerdy fans. Poised to become a crossover hit before the first episode even aired, the show was buoyed by passionate fans of the books who evangelized this particular epic to non-believers for years.
That dedication is finally paying off.
“I’ve been trying for years to get a half a dozen friends to read the books. Once the show caught on, I got them watching and it got them to read it. I love it,” says Stephen Dabundo, a 26-year-old lifelong fantasy geek from Atlantic City, New Jersey, who has only now been able to share this part of his life with certain friends.
And that popularity equals revenue for HBO, not just in the form of subscriptions, but also international and home video sales. This excellent article from Slate’s June Thomas explains well why HBO is able to make so much more money on their shows than their premium cable competitors, Starz and Showtime.
HBO typically banks half the subscription fee from new viewers; Showtime and other pay-cable networks tend to strike deals in which distributors pay a flat licensing fee and then keep customer subs for themselves. This encourages providers to discount Showtime, which increases subscribers without necessarily earning the network more money in the short term.
HBO has made other decisions that bring in the bucks. Unlike most networks, HBO owns, rather than licenses, almost all its shows. (Showtime owns about half its output; the recent breakout hit Homeland is produced by Fox.) That makes programming more expensive, but it’s a smart move. The first season of Game of Thrones was reported to cost between $50 million and $60 million to produce; but international sales covered more than $25 million of that. (Showtime, on the other hand, doesn’t benefit from international sales of Homeland—Fox does.) HBO also has complete control over decisions about syndication and DVDs. Not only does it bank the proceeds from DVD sales—Season 1 of Game of Thrones sold about 350,000 copies in the first week it was available—it can also time the release date to maximize subscriptions.
So HBO has to spend more money on their shows, but in turn that makes them more money. And Thrones is making a lot of money for them. The season two premiere ratings show that the audience for this show continues to grow and with it a jump in revenue.
So fear not, the season three greenlight is coming (and maybe season four as well), and likely to come with it, an even bigger budget.
[Thanks to Michael Harper for the Empire magazine excerpt!]