Amazon’s $325 million investment to take on Netflix, the latest in a long line of plays

AMAZON recently secured a highly anticipated TV show for $A325 million, but it’s just the latest move in a war involving Netflix, Apple and Disney.

NETFLIX might be considered the king of streaming, but its competition is always nipping at its heels.

In the past couple of weeks, Amazon Prime Video, Apple and Disney have all announced major investments to win customers in the streaming war.

The latest play comes from Amazon Prime Video, with boss Jeff Bezos announcing a multimillion-dollar deal with the J.R.R. Tolkien estate and New Line Cinema to create a prequel to Tolkien’s The Fellowship of the Ring.

Amazon Prime heads to Middle Earth. https://t.co/QowUmf8t3S pic.twitter.com/YVciEX3u2t

— Jeff Bezos (@JeffBezos) November 13, 2017

The company was being considered along with Netflix and HBO, but won the deal by bringing an upfront rights payment said to be close to $A327 million, reports Deadline.

This large investment will only cover the rights to show, with a huge budget expected for development, talent and production.

If the fantasy format of Game of Thrones is anything to go by, Amazon could be looking at production costs of $A7.87 million per episode for the Lord of the Rings series.

Head of scripted series at Amazon Studios Sharon Tal Yguado said the television adaptation will explore new storylines in Middle Earth.

“The Lord of the Rings is a cultural phenomenon that has captured the imagination of generations of fans through literature and the big screen,” he said.

This investment eclipses other big-ticket series commitments Amazon has secured over the past couple of years, which include $A328 million for The Grand Tour, $A104 million for Woody Allen show Crisis in Six Scenes, $A91 million-plus for Matt Weiner’s The Romanoff.

Jimmy Iovine has already made big plays with Dr Dre and hopes Drake will be similar.

The move comes one week after Apple gave Canadian rap superstar Drake a “blank cheque” to leave his mark in the world of film and television streaming.

Apple is planning to spend billions on video content in the next few years and one of the top executives, Jimmy Iovine, said Drake has the “go-ahead” to produce whatever shows or movies he wants using these funds.

Vice president of media apps and content at Apple Music Robert Kondrk said Drake has already been one of the company’s most valuable partners, with his most recent album Views being the first to exceed one billion plays on the service.

“Drake almost single-handedly helped us become culturally relevant from the day we launched [in 2015],” he told The Hollywood Reporter.

Earlier this year, Apple said it committed $A1.2 billion to procure and produce its own original content in 2018.

The budget falls well short of the $A7.5 billion Netflix spent this year, but according to the people familiar with the plan, Apple plans to acquire and produce as many as 10 television shows.

Comparatively, the amount is about half of what HBO spent on content last year.

As part of its plan to enter into the crowded online streaming service market, the iPhone manufacturer poached two long-time Sony Pictures Television executives responsible for some of the most widely acclaimed programming of the past decade.

Having served as presidents for Sony Pictures Television since 2005, Jamie Erlicht and Zack Van Amburg played an instrumental role in developing the likes of Breaking Bad, The Crown and Better Call Saul.

In 2019, Marvel movies like The Avengers will only be on Disney’s streaming service.

In August, Disney announced it would be ending a 2012 deal that brought all of the studio’s films exclusively to Netflix to create its own streaming service.

During the company’s quarterly earnings call earlier last week, Disney chairman Bob Iger announced a deal with director Rian Johnson to develop a new Star Wars trilogy and a live-action Star Wars TV series.

He also announced series adaptations Monsters Inc, High School Musical and an original entry from Marvel.

The latest developments come after a number of multi-billion dollar acquisitions since Iger took over the company in 2005, which include Pixar in 2006, Marvel in 2009 and Lucasfilm in 2012.

During last week’s earnings call, Iger claimed the average global box office for Disney’s animated movies was more than $A872 million, while Marvel films averaged $A1.1 billion each.

He said The Force Awakens and Rogue One: A Star Wars Story also secured over $A3.9 billion.

It is for this reason Disney was looking to develop its own streaming service, with the belief these exclusive titles would be enough to attract customers when it launches sometime in 2019.

Mr Iger said the Disney service would be attractive to customers as it would cost less than Netflix.

“I can say that our plan on the Disney side is to price this substantially below where Netflix is. That is in part reflective of the fact that it will have substantially less volume,” he said.

“It’ll have a lot of high quality because of the brands and the franchises that will be on it that we’ve talked about. But it’ll simply launch with less volume, and the price will reflect that.”

Netflix users will still have access to Disney films through the end of 2019, including movies opening in theatres throughout 2018.

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Originally published as Amazon’s $325 million investment to take on Netflix, the latest in a long line of plays