Amazon struck a deal to create a series of prequels for Lord of the Rings. Derek Thompson looked at the staggering economics of the deal:

• Amazon is thought to have paid $250 million just to acquire the rights to create a show.
• Actually producing one will cost hundreds of millions more, and then there’s marketing costs.
• Amazon might wind up spending half a billion dollars on creating a show – that most people will just stream as part of their existing Amazon subscription.
• Still, Peter Jackson’s Lord of the Rings movies made $6 billion across six films, so maybe the economics will work out well.
• And adding more content to a well-explored universe has proven to be lucrative for others. Disney, after all, has essentially been making the same Marvel movie repeatedly for over a decade now.
• People like the familiar. Despite all the money spent on original content, people are most likely to watch back catalogues of old favourites on streaming services.
• And it makes sense for Amazon to bet big on a few headline shows. The rewards of having one great show can be exponentially better than having several good ones.

Read more analysis on The Atlantic.