It’s being billed the “battle of the prequels,” a matchup that could tip the scales in the streaming wars.

After months of heated debate, Amazon Studios’ The Lord of the Rings: The Rings of Power, the most expensive show ever produced, finally airs its pilot episode on Prime this Friday. Jeff Bezos is investing an estimated $1 billion in the series, which takes place thousands of years before the seminal J.R.R. Tolkien works on which it is loosely based.

It comes just days after the first installment of House of the Dragon racked up 10 million views, a record for HBO that was topped soon afterward by the second episode. The Games of Thrones spinoff, which costs reportedly up to $20 million per episode and has already been renewed for another season, chronicles the Targaryen bloodline that ultimately sires fan favorite Daenerys Stormborn and follows on from the critically panned eighth season that concluded the original series. 

This fantasy face-off between Amazon and HBO is being closely watched for clues to which streaming platform will prevail in a very real commercial war. There has been a veritable arms race in spending on new streaming content, with fellow streamer Disney earmarking $30 billion in the current fiscal year for programming in a business its finance chief doesn’t expect to be profitable until 2024. The House of Mouse is countering Amazon and HBO Max with its own Star Wars–themed prequel series later this month called Andor that is based on the 2016 film Rogue One.

It all begins today. #TheRingsOfPower pic.twitter.com/JqDRK5oQbR

Even a consumer electronics group like Apple has entered the fray with series like the Apple TV+ hit Ted Lasso. 

“People talk about peak production, but I cannot see this boom ending anytime soon,” Ampere Analysis executive director Guy Bisson told Fortune. 

The target of all this spending? The millions of Americans who remain cable TV customers; 34% of U.S. viewers still haven’t cut the cord with providers like Comcast that bundle hundreds of pay TV channels few customers ever wanted in the first place. 

Earlier this month market research firm Nielsen reported that in July streaming usage (including YouTube) surpassed cable by minutes consumed to claim the largest share of television viewing for the very first time, helped by the fourth season of Netflix’s Stranger Things.

A key new development that has enabled the spending to continue—albeit at a predicted slower rate of growth—has been the shift away from territorial licenses in favor of owning global rights, as well as the increasing acceptance of non-English programming such as the ultraviolent South Korean show Squid Game that became Netflix’s most popular hit ever. 

On your marks. Get set. Greenlight. Squid Game continues, only on Netflix.#SquidGameS2 pic.twitter.com/spH30iRDO4

“You need a very large market in order to generate a return on that investment,” said Paramount CFO Naveen Chopra in June, adding the company formerly known as ViacomCBS is one of the largest producers of Spanish-language content on the planet. 

“That is why both we and most other players in the streaming universe are focused on having a global streaming footprint, because you’ve got to be able to access hundreds of millions of customers as opposed to just being limited to the United States.”

Netflix turned 25 last month and has been behind the revolution from the beginning. The launch of its on-demand service in 2007 started the trend of cable cord-cutting. Disney later fired the first real shot in the streaming wars with The Mandalorian, after it was emboldened by the 2013 breakaway success of House of Cards and Orange Is the New Black on Netflix.

Moreover Hollywood itself has discovered streaming as a means to develop content and series that would not otherwise be financially possible since the loss of lucrative DVD sales: “That changed the type of movies that we could make,” actor and producer Matt Damon said on First We Feast last month.

Meanwhile, the industry middlemen that used to handle distribution of studio content—movie chains like AMC—are suffering. AMC, the world’s largest cinema chain operator, is worth just 4% of Netflix market cap and is best known as a meme stock, while the U.K. parent of Regal Cinemas, No. 2 in the industry, teeters on the brink of bankruptcy.

“It’s difficult to overstate how significantly the industry is being reengineered. There’s not been anything like it since the first studios were founded in Hollywood a century ago,” said Bisson.

He believes three groups can survive the coming shakeout: niche players with extremely low production costs; major Hollywood studios with decades of experience in the industry; and tech platforms like Amazon and Apple that choose to afford their streaming costs, in part to feed their core retail businesses: “It’s everyone in between where the consolidation will start to happen.” 

The recent premieres of tentpole epics like The Rings of Power mask the fact that the days when studios would not hesitate to splurge in the quest for subscriber growth and lower rates of churn appear over. 

“You’ve got soaring content costs, high debt burden, increased competition, and worst of all a consumer who’s really strapped in their wallet with gas prices and food prices climbing, and we all have way too many streaming services,” said Lou Basenese, founder of Disruptive Tech Research, in April after Netflix shocked with a sharp decline in Q1 subscriber numbers.

Major change is in store as platforms move away from fewer big-budget dramas and experiment with new advertising-supported subscription plans and shows that feature lower production values—anything to slow the arms race, stretch their budgets, and get more bang for each buck. 

“When Wonder Woman 1984 was released on streaming, it came at a critical time for HBO Max, but now as the market matures, you would never use it to acquire new customers—it’s too expensive,” said Bisson. “That’s why you’re seeing an increase in game shows and reality TV, formats never touched two years ago that are cheap to produce and can appeal to those that grew up with the Kardashians.”

says a lot about collective franchise fatigue that in the span of a couple weeks we’ll have HOUSE OF THE DRAGON, RINGS OF POWER, SHE-HULK and ANDOR releasing basically at the same time and the general vibe is “eh, hope they will be ok” pic.twitter.com/B9i9wAamwH

Even as House of the Dragon premieres, HBO’s streaming operations are laying off 14% of their staff following the acquisition of HBO parent WarnerMedia by Discovery, best known for its unscripted (and inexpensive) programming, documentaries, and talk shows. 

Discovery CEO David Zaslav has since presided over a bloodbath in gutted high-priced programming in his new asset, with one laid-off HBO Max executive telling The Daily Beast that Zaslav would ideally just monetize Chip and Joanna Gaines’ show Fixer Upper “all day long.” 

Other Warner programming scrapped following its takeover by Discovery includes a raft of content associated with the DC Comics universe, such as the near-finished Batgirl movie (reportedly to reap a tax write-down), as well as the ignominious axing of CNN+ only a month into launch.

“They’ve been canceling shows, particularly big-budget ones, to bring its streaming business to profitability,” said Tim Westcott, who leads research on TV and video programming and channel distribution at Omdia. “So it is difficult to say whether House of the Dragon would have been commissioned at $20 million an episode under the current regime.” 

Paramount is responding to competitive pressures by bundling the offerings of sister platform Showtime into its own eponymous streaming service to gain scale. It also struck a deal last month with brick-and-mortar retailer Walmart to include free Paramount+ streaming as part of its premium service in a direct response to Amazon Prime. 

Not all are prepared to spend money hand over fist to build up a streaming platform complete with their own content, however. In January Google abandoned earlier ambitions to go toe-to-toe with rivals and will focus on other features such as downloading videos to view offline in order to promote its YouTube Premium subscription. The programming executive behind popular YouTube originals like Cobra Kai, Susanne Daniels, resigned amid the new direction.

Still others decided not to even join the streaming wars to begin with. Sony Pictures Entertainment appears satisfied to sell its content, such as its upcoming series based on beloved PlayStation exclusive The Last of Us, to the highest bidder. 

“We became for lack of a better term the arms dealer for the industry, and it’s paid off really, really well,” said Sony Pictures CEO Tony Vinciquerra in an interview with CNBC. “While the streaming services have all said they’re going to be more fiscally conservative, they’re still going to have to put product on their services in order to draw subscribers, they’re still in battle every day.”

An update on YouTube Originals: pic.twitter.com/PixhgZ2yhU

By comparison, Amazon is in a unique position: A failure of its Rings of Power would be embarrassing for its reputation, but it’s not going to hurt—especially when set against the $11.5 billion first-half loss incurred on its stake in EV maker Rivian.

That’s because Amazon is effectively an IT services and web hosting company that operates a large online retail business on the side. Its hugely successful AWS division, the largest cloud computing service in the industry, mints billions of dollars in profit every quarter for shareholders.

It’s true that Rings of Power comes with an eye-popping price tag, but it is one that highlights how little Amazon has paid for original content compared with Netflix. The cost pales in comparison to Bezos’s blockbuster 11-year deal with the NFL for the right to streaming later this month American football games on Thursday night, reportedly for $1 billion—per season. 

“Arguably the NFL deal is more important to the Amazon Prime business, but Rings of Power is a calling card to show they’re serious about streaming,” said Omdia’s Westcott. “Producers around the world are now more likely to bring their projects to Amazon, knowing that it is willing to stake so much money on a global franchise launch.”

For now, it seems the outcome of the streaming wars is clear. Media groups’ experimentation with the new business model means the consumer wins from a strong pipeline of new shows and more affordable subscription tiers.

It’s the stockholders who lose: The industry’s major streaming providers have all underperformed the S&P 500 index heavily over the past 52 weeks, losing anywhere between 27% for Amazon and 38% in the case of Disney to as much as 62% for Netflix, with Warner Bros. Discovery and Paramount in between. But even that won’t cause the generous spending to stop.

“The arms race will slacken off a bit after the huge rates of growth in the past, but it doesn’t mean people will be spending less on new shows on a per-hour basis,” said Westcott. “As long as Amazon, Disney, and Netflix invest lots of money in programming, then their competitors are going to feel they have to do that as well.”

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