Game of Thrones, a show that has grown from strength to strength with every season, came to a close on 19 May (in the US), with the airing of Episode 6 of Season 8. It will also mark the end of a global money-making machine for HBO, and other channels and digital streaming platforms around the world.
Cost of making GoT
HBO is said to have spent a total of $90 million on the production of Season 8 of Game of Thrones, making it the most expensive TV show in television history. That does not include the price of re-shoots and additional VFX effects. This is higher than Netflix’s most expensive production, The Crown, which is made at the cost of $10 million per episode.
According to a report in Variety, the channel spent $15 million on each of the six episodes. And to think that they began with spending an average of about $6 million per episode in the first season! The budget for the show has thus grown almost three times since it began in 2011.
Obviously, the budgets have increased monumentally, thanks to the worldwide viewership that has consistently increased in number as the show has progressed.
Acquiring global market
As word about the show spread, around 2014, GoT became one of the most pirated shows around the world. Viewers in markets outside the US began seeking out unauthorized sources to catch the episodes before the spoilers were out.
As chatter on social media grew and the news about the high rates of piracy began doing the rounds, the show got a free promotion of sorts.
In 2015, just before the start of its fifth season, HBO announced that it had deals in 170 markets around the world to air new episodes simultaneously with its US broadcast.
A lot of the show’s earning began coming in through international rights from its fifth season onward. This was a big step for HBO, and it also meant that they could increase the budget of the show.
The viewership
Each year Game of Thrones has seen growth in audience, a rarity for television shows, which generally lose viewership over the course of the seasons. The first episode of the show garnered only around 2.22 million viewers on airing.
“Season 8 of Game of Thrones is averaging at around 43 million viewers per episode in gross audience, an increase of more than 10 million viewers when compared to season 7,” HBO said in a statement.
The penultimate episode of season 8, The Bells, which marked the turn of one of the fan favourite characters, Daenerys Targaryen, attracted 18.4 million viewers (live viewership) on HBO in the United States (HBO Go and HBO Now - the OTT platform).
This set a new series record, after season 8 episode 3, The Long Night, recorded 17.8 million viewers (live ratings).
Not only is GoT the most-watched show in HBO history, but the franchise is also worth over $1 billion, commanding nearly 30 million viewers per episode in the US alone, according to the New York Times.
The total viewership around the world for season 8 is expected to be around 1 billion, according to estimates, but as it is also one of the most pirated shows in history, the numbers could be much higher. Also, more than one viewer could be watching the show on a single TV or stream.
How HBO makes money
HBO spends billions of dollars each year towards creating unique content. Read: Westworld, Silicon Valley, True Blood, Big Little Lies, Veep, in recent times, among others. The paid channel cashes in on the quality content, leading to a consistent rise in the number of subscriptions over the years.
HBO’s strategy is quite different from most of the other network channels in the US, which traditionally depend on advertising to make most of their money.
HBO doesn’t rely on advertising. Instead, it depends on people paying $10 to $15 a month for cable and streaming subscriptions. And it has really worked for the channel so far.
According to reports, around 30-40 million people were subscribed to HBO in 2017, so that made the monthly income of the channel around $300 million (around Rs 2100 crore) to $400 million (Rs 2800 crore approximately) and that’s just the subscription income.
In 2016, 10 episodes GoT ran for 10 weeks, which is about two and a half months. The viewership for the season was around 8.9 million. Therefore the viewer required to pay for at least 3 months subscription to watch it. That takes HBO’s income to over $267 million (at a subscription fee of $10 per month) just from Game of Thrones. HBO has said in its report that the production cost for the season stood at $100 million. Thus, there are huge profits to be made.
The channel produced profits of $6 billion (around Rs 4182 crore) between 2015 and 2018, according to reports, and a lot of the gains can directly be attributed to the popularity of Game of Thrones.
In 2014, GoT surpassed The Sopranos, which was HBO’s biggest hit show earlier. As the network’s most popular series, Game of Thrones makes a significant contribution to HBO’s revenue via subscriptions in the US, merchandising and licensing around the world, and the international market.
Merchandise and games
What helps is that Warner Media, which owns HBO, produces and distributes the show and owns all the rights, bringing all the revenue into their pockets.
The show has extensive merchandising tie-ins, including Oreos, adding to the ancillary benefits of the TV channel, but keeping down the counterfeit market for the show’s merchandise has always been one of the challenges.
HBO has licensed a variety of merchandise based on GoT, from weapons and armour, to jewelry, dolls, beer and clothes.
Some of the most high-end merchandise includes a $30,000 resin replica of the Iron Throne. There are also the strategy games for computers and mobile.
Copyrights and subscriptions
Since HBO doesn’t use the traditional advertising model, it’s less concerned about what it makes when a new episode first airs. It’s more about how much it makes all year, and the year after that, especially with a show as big as Game of Thrones.
For example, HBO has sales from DVDs for its shows and various online products, which has also become a way for HBO to market to consumers around the world.
And for HBO, it’s not about when you watch GoT, it’s just about watching, either now or years from now. So, while the final episodes of the show are raking in the dollars based on viewership alone in the way that traditional network TV events do in the US, it also contributes to HBO’s bottom line.
The initial viewership number is a starting point, and each episode attracts even more views over time as people continue to discover or rediscover the show as years go by.
By 2015, HBO had deals in 170 markets around the world. In India, with the premiere of the 7th season OTT platform, Hotstar, began airing the episode at the same time as in the US in 2017, cutting down the piracy to an extent. Similarly, HBO managed to bring down the piracy considerably by striking deals with streaming platforms around the world.
In 2016, Hotstar had made a clever move of introducing a paywall of Rs 199 per month for GOT’s sixth season and other select content. That definitely worked for the OTT platform which till January 2017 commanded 63 million subscribers, according to KPMG FICCI Report of 2017. So, Hotstar gained hugely from airing GoT on its platform during its initial years.
HBO thus gained hugely from selling international rights, though the channel has not released the exact figures of these earnings yet.
Challenges ahead
According to a report in Techcrunch.com, HBO relied heavily on Game of Thrones to grow its streaming platform over the years. “The metrics indicate potential struggles ahead for HBO parent company WarnerMedia’s forthcoming streaming service. Due to launch into beta later this year, the service will be led by HBO content. But without new episodes of Game of Thrones, it will have to rely on other popular shows, like Westworld, to pull in viewers,” said the report.
Even though Westworld is HBO’s second most-watched show, GoT has triple the number of viewers.
HBO NOW, HBO’s OTT platform, generated 12 percent less in 2018, at $166 million, down from $189 million, according to Techcrunch.com.
The reason, quite obviously, was that the app was without Game of Thrones to attract viewers as the show was on a sabbatical in 2018.
Thanks to this proof in numbers, the network is aware of the negative impact the end of GoT could have in terms of cancelled subscriptions. And therefore it has already green-lit plans for a Game of Thrones prequel. And there are other spin-offs in the works too.
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