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Rise Of Internet TV: Netflix, Amazon Ramp-Up Programming Investment

Netflix and Amazon have ramped up their respective investment in TV programming in recent years, last year outspending the likes of CBS, HBO and Turner, along with most countries, including Australia, IHS Markit has found.

Both Netflix and Amazon more than doubled their annual expenditure on programming between 2013 and 2015, according to findings from a new IHS report, with Amazon spending US$1.22 billion in 2013, rising to US$2.67 billion in 2015, with Netflix’s spending rising from US$2.38 billion to US$4.91 billion.

Meanwhile, other online platforms such as Hulu in the US, along with Youku Tudou, iQiyi and Tencent in China, also have “increased their investment in original programming and acquisitions”.

Tim Westcott, IHS Technology senior principal analyst, noted that the levels of investment from Netflix and Amazon are topped only by Disney (US$11.84 billion) and NBC (US$10.27 billion).

“In what Netflix calls the era of internet TV, more and more consumers are watching content online, shaking the foundations of the traditional TV industry,” Westcott commented.

“However, it’s premature to declare that the era of linear TV is already over, and Netflix and Amazon have come hard on the heels of a boom in production of original drama and comedy by the likes of AMC and FX in the US.”

IHS found that thus far this year, there have been 113 scripted basic cable shows in the US, compared to 78 on the networks, 31 on premium cable and 57 online – online scripted US TV shows have grown from three in 2012, rising to 20 in 2014 and 41 last year.

Westcott stated that IHS estimates that the US represented 33 per cent of worldwide expenditure on TV programming last year, with US$43 billion invested across free-to-air, pay TV and online.

“Amazon and Netflix, though they are US companies, are now commissioning for multiple territories, so we have treated them as global platforms,” he stated.

After the US, the mature Western European region invested US$38.6 billion, while in the Asia Pacific region, Japan was the largest market with US$9.8 billion, with China now the second largest (US$8.4 billion), followed by South Korea (US$2.6 billion), and Australia and India (both US$2.4 billion).

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