“Squid Game,” Netflix’s most successful series to date, is an exception not just in terms of worldwide viewership. As a comparison shows, the hit series is also unique compared to the production costs of other series formats.
The big players in the global streaming business don’t like to talk about numbers and budgets. This is especially true when it comes to the production costs of series. Nevertheless, every now and then budgets leak out to the trade press and thus to the public. Such is the case with “Squid Game.” In doing so, this series reveals a lot of amazing things.
But different from what you’d expect.
Comparison of the costs for the production of “Squid Game” with other series
The production budget of “Squid Game” is competitive in every way. Whereby this statement is rather understated, if one compares the figures for the production of the series with known key data of other formats. And that’s not just in terms of the total time global audiences have spent watching the series so far as of mid-October: a whopping 1.4 billion hours.
Sources: Bloomberg, Variety, Hollywood Reporter
“Squid Game” costs Netflix €2.064 million per episode. Sound like a lot? Well, with Lord of the Rings (2022 on Amazon Prime), the first season costs a whopping $465 million, making a whopping 19.950 million with a planned 20 episodes per episode. It should be noted here, however, that the rights to Lord of the Rings had to be acquired for a quarter of a billion USD – although, of course, the comparative series also had to acquire the rights, albeit to a lesser extent.
The only thingmore expensive is the cost of WandaVision from Disney+. For this series, the production budget per episode is 21.5 million euros. The Mandalorian, also a Disney series, is only slightly below that with a price per episode of €19.995 million.
Netflix’s The Crown is almost a bargain in comparison, costing €8.6m per episode. Stranger Things (also from Netflix) is also cheaper at € 6.88 million per episode – but the unrivalled leader in terms of production costs and success is and remains: “Squid Game”.
“Squid Game: Production costs vs. success
What is known is that Netflix’s “Squid Game” was able to reach more than 111 million households as of mid-October. Since Netflix’s business model is based on a subscription model, the streamer calculates the success of its movies and series with a so-called impact value. This ratio takes into account various success factors in its calculation.
The exact composition of this characteristic value is secret. The impact value for “Squid Game” though, that has been released to the public as a total as well. It amounts to USD 891.1 million or EUR 766.260 million.
If you put this figure in relation to the total costs for the production of 9 episodes of 60 minutes of the series, namely € 18.54 million, it shows a multiplication / increase in value of the funds invested in the series for Netflix by an incredible 4170 % (factor 41.7).
Sources: Bloomberg, Variety, Hollywood Reporter
Even if the individual drivers and their weighting for the calculation are secret, there are two undisputed considerations in the calculation and interpretation of the impact value:
Firstly, in addition to viewer numbers, the impact on image plays a role because this indirectly leads to further growth and helps to retain existing subscribers. Secondly, because Netflix is listed on the stock exchange and, as a global company, is commercially oriented, economic success is ultimately decisive, which is why it is logically imperative that this is reflected in the calculation of impact value in the form of costs and revenues.
Budget analysis of “Squid Game”
If we go one step further and superimpose the industry-standard distribution keys for series productions on the absolute budget values known for the series (average costs per episode), a cost analysis shows the following allocated figures:
Sources: Comparison/experience values filmpulse.info. The presentation in the form of a breakdown of budget items into above-the-line and below-the-line, which is customary in the USA, was deliberately dispensed with.
It should be borne in mind that the extrapolated figures are only percentage estimates based on experience and comparative costs. While the total cost of producing the series is known, this is not the case for the detailed items in the production budget.
At the same time, and assuming that the approximation of these numbers for “Squid Game” to the budget isn’t completely wrong, there are two other crucial points to consider when interpreting the production budget numbers:
At Netflix, the development risk is borne by the writers and producers. Specifically, this means that filmmakers develop a series without pay at their own risk. Money will only flow if the concept, series idea and first script versions convince the streaming provider for a realization.
Dong-hyuk Hwang, the writer-director of “Squid Game,” said in an interview that just writing the scripts took him more than a month and a half of work per episode. Hwang’s previous unpaid development of the idea and concept for the series took several years.
Production preparations and filming for a series of 9 x 60 minutes, including picture editing and sound, take another two to three years from the time of approval for implementation to completion.
Against this background, the salaries, which at first sight appear high, are put into perspective.
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