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Amazon Spent $107 Million on ‘Man in the High Castle’ Season 2 (Report)

Amazon Studios shelled out some $107 million in production and marketing costs for season 2 of alternate-history thriller “The Man the High Castle” — working out to nearly $11 million per episode. But the pricey show was a bomb in terms of attracting new subscribers to Amazon’s Prime membership program.

That’s according to the data in a report by Reuters Thursday, based on what it said were internal Amazon documents showing the cost/benefit analysis of 19 of Amazon Studios original series from 2014 to early 2017.

Overall, during that time period, Amazon originals attracted more than 5 million people worldwide to Prime. In the U.S., Amazon Video drew 26 million viewers total for original and licensed content (as a year ago), per Reuters estimates based on the documents. As of September 2017, Amazon Prime had about 90 million U.S. members, according to estimates by Consumer Intelligence Research Partners.

Amazon declined to comment on the Reuters report or verify the authenticity of the internal documents cited. The documents referenced purportedly show how Amazon calculates the return on its investment in originals.

According to the Reuters report, Amazon tracks which TV show or movie a customers first accesses after they sign up for Prime as an indicator of its strength as a subscriber-acquisition vehicle. The company refers to that metric as the “first stream.”

The data in the Amazon documents shows that it’s had wildly divergent outcomes.

Amazon’s biggest flop was “Good Girls Revolt,” according to the figures cited by Reuters. The company spent $81 million on the retro drama about female journalists fighting for equality at a newsweekly mag. However, Amazon registered just 52,000 “first streams” for “Good Girls Revolt,” for a cost-per-sub number of $1,560. Amazon canceled the show less than two months after it premiered in 2016.

Meanwhile, the freshman season of “The Man in the High Castle” was among the best-performing series in the documents — and was far more efficient at luring Prime members than season 2.

Per the Reuters report, “Man in the High Castle” season 1 had $72 million in production and marketing costs, and drew 1.15 million Prime subs subscribers based on the “first stream” measure. That translates into an average cost of $63 per Prime subscriber acquired for the series, which is based on a Philip K. Dick novel. By contrast, Season 2 of “The Main in the High Castle” yielded $829 per Prime subscriber, more than 13 times the first run of the show.

Amazon’s $78 million spending on the first season of “The Grand Tour,” the motorsports show from the trio behind BBC’s “Top Gear,” also was a win for the studio. With 1.5 million “first streams,” Amazon calculated a cost of $49 per Prime subscriber acquired for “Grand Tour” season 1.

Amazon’s highest-profile show is “Transparent,” a winner of several Emmys and Golden Globe awards. Reuters did not cite production or marketing dollar figures for “Transparent,” but said the show’s season 1 had a U.S. viewership that was half the 8 million of “The Man in the High Castle” season 1. For season 3, the “Transparent” dropped to 1.3 million viewers.

However, the figures reported by Reuters don’t fully reveal how Amazon accounts for its investments in original programming. In the U.S., the $99 annual fee for Prime, which includes free shipping on millions of items, unlimited streaming of Prime Video, and other benefits. Prime subscribers are far more valuable to Amazon beyond the subscription fee, as they on average buy more products from the ecommerce site than non-Prime members.

In addition, the analysis excludes Amazon’s standalone Prime Video service ($8.99 per month in the U.S.), initially launched in the U.S. two years ago and expanded worldwide in late 2016. Meanwhile, Amazon spends more on licensed programming than originals for its streaming service — the company’s total video content budget is projected to be $5 billion this year, according to JP Morgan estimates.

Other details from the documents cited by Reuters: “Sneaky Pete” season 1 cost $93 million; “Goliath” season 1 cost $82 million; “Bosch” season 1 cost $47 million, and season 2 cost $53 million; and “Mozart in the Jungle” season 2 cost $37 million.

The shows detailed in the Reuters article were greenlit under Roy Price, who exited as head of Amazon Studios after a sexual-harassment scandal in November. Amazon last month tapped NBC Entertainment president Jennifer Salke to run the studio.

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