Game of Thrones has changed entertainment in a way that few, if any, TV shows ever have. After HBO forerunners like The Sopranos ushered in the golden age of television, Game of Thrones defined it. It's bigger, better, and more expensive than anything else on TV, and it has helped HBO retain its reputation for creating superior original content at a time when Netflix (NASDAQ:NFLX) and other services are striving to compete in that same category. Now Game of Thrones is preparing to go out with a bang: a super-expensive final season that promises to be one of the biggest television events in history.
But what will happen when that event is finished? What will HBO and parent company AT&T (NYSE:T) do when it doesn't have Game of Thrones?
Game of Thrones' historic run
Game of Thrones is immensely, immensely popular. On average, more than 23 million Americans tuned in to watch episodes of the show's sixth season.
Having more than 20 million viewers watch a single episode is the stuff of all-time TV history: a typical Game of Thrones episode from season six drew roughly as many viewers as the series finale of Full House (the finales of Seinfeld and M*A*S*H still lead by tens of millions of viewers, but Game of Thrones has not, of course, had its finale yet).
And Game of Thrones' impact goes beyond the raw statistics. It's hard to find anyone who hasn't heard of the prestige series, which is an immensely impressive thing for HBO and its brand. HBO was already at the top of the prestige television heap before Game of Thrones, but it's hard to imagine HBO defending its perch as well as it has against would-be usurpers like Netflix (Stranger Things, House of Cards) and Showtime (Billions, Homeland) without its historic headliner setting the pace.
Game of Thrones does a lot for HBO, but none of this comes cheap. Historically, the show has been expensive, and episodes of the final season will run a staggering $15 million apiece. By most estimates, Game of Thrones is the most expensive TV show of all time.
After next season, HBO is going to have a lot of money to spend on other things. It's also going to have a Game of Thrones-size hole in its lineup. So the question is: Just how big is that hole? What is Game of Thrones worth to HBO?
What is Game of Thrones worth to HBO?
We've established that Game of Thrones is a hit and that it drives viewership and subscribers. We've also established that it costs HBO a pretty penny to keep the show on the air. So what does all of this look like when we balance the books?
Game of Thrones has racked up serious views over the years, and its popularity is still growing. Live viewership has grown by millions, and time-shifted streaming numbers add millions more.
|Live Viewers per Episode
||2.51 million||3.80 million||4.97 million||6.85 million||6.97 million||7.72 million|
But that doesn't necessarily mean that the show is all-important to HBO's financial bottom line, which is driven by subscription counts, not streaming numbers.
So can we prove that Game of Thrones is a big boost to HBO's subscriber numbers? The Motley Fool has tackled this question before, and found evidence for the connection to be fairly weak. Even if we credit the show with growing HBO's subscriber numbers, it doesn't necessarily follow that losing it will reverse the process in a meaningful way; HBO's own post-Sopranos experience suggests that it can survive the departure of a top-rated show and continue to grow. Game of Thrones is more popular than The Sopranos was, but both were the top shows of their time.
This is not to say that Game of Thrones isn't important for HBO's reputation and overall success, but rather to say that in a pure dollars-and-cents calculation, Game of Thrones' departure doesn't look like a financial disaster for HBO.
Of course, a more complete calculation of Game of Thrones' worth goes beyond subscriber figures and growth. Season seven's premiere generated 1.6 million viewer tweets. That's a lot of viral advertising for HBO. And Game of Thrones' prestige and popularity has meant that even big stars tweet about the show. Jennifer Lopez and Mindy Kaling, among others, have taken to social media to express their love of it. Celebrity tweets can be worth north of $50,000 by some estimates. All of this isn't much when weighed against the show's cost of $15 million per episode, but these little boosts to HBO's reputation help.
Game of Thrones has also bolstered HBO's excellent reputation for original content, and that reputation may have helped HBO score more subscribers -- while warding off competitors like Netflix -- in ways that are hard to account for on paper. We'll have to accept that limitation, but investors should keep that element of uncertainty in mind when evaluating HBO's post–Game of Thrones prospects.
Life after Game of Thrones for HBO and AT&T
It's never a good thing to lose a monster hit from your roster, but HBO is not sitting idle. The company has been working hard to extend the Game of Thrones magic in the form of not one, not two, but at least four spinoff shows set in the Game of Thrones universe.
The high-volume approach is an interesting strategy, especially for a company famous for its quality-over-quantity approach. But quality, it seems, is still the goal: reps say the expectation is that HBO will produce just one of the spinoffs currently in development.
Creating multiple shows gives HBO multiple shots at recapturing Game of Thrones' magic. It also gives it the option of producing multiple shows -- after all, its proclamations to the contrary are hardly set in stone.
Regardless of the fate of its spinoffs, it's important to remember that Game of Thrones was a hit in large part because it was so different from what came before. It was a massive and expensive show, the only high-budget fantasy epic on TV. HBO is counting on its spinoffs strategy to make money, but the less measurable part of Game of Thrones' impact -- its renewal of HBO's prestige -- can only be replicated by another show that feels fresh and innovative.
What that show will look like remains to be seen. The Sopranos and Game of Thrones were nothing alike, and the next earth-shattering series won't necessarily have much in common with either. HBO will hope that it has at least one thing in common with those titles, though: a home on HBO.
What Game of Thrones ending means for investors
In investing terms, there's not much reason to panic over Game of Thrones' departure in the near term. The immediate financial impact of losing the show should not be so great that it can't be overcome by the rest of HBO's catalog. Game of Thrones' dedicated fan base is likely to give spinoff stories a chance, and HBO has plenty of other solid shows in its lineup.
But the long-term consequences of the coming power vacuum in prestige TV are a bit more interesting. HBO has long been the service with the most prestigious show on TV. But it is nowhere written that HBO has to keep winning in every round. The next Sopranos or Game of Thrones could come from another service, which is why the post-Thrones period is going to be a very interesting time to watch Netflix, Showtime, and other streaming services and premium channels.
Nothing will happen overnight, but having TV's biggest show for even a few years could change the long-term reputation of any of HBO's competitors. If Game of Thrones' departure means anything beyond the near-term dollars and cents to HBO, it's that this is a chance for another service to seize the prestige TV throne.