Online overtakes traditional in TV programming investment

( –Netflix and Amazon have stepped up their investments in programming spending more than US$7.5 billion last year – more than CBS, HBO, Turner and most countries including South Korea and Australia.

Between 2013 and 2015, both companies have more than doubled their annual expenditure on programming. Amazon spent USD 1.22 billion in 2013 to USD 2.67 billion in 2015. At the same time, Netflix rose from USD2.38 to USD4.91 billion.

These statistics are from the World TV Production Report 2016, a forthcoming report by IHS Markit, a London-based market analysis and information firm, which examined how TV programme producers are adapting to the era of internet TV.

“The levels of investment we are seeing from Netflix and Amazon are only topped by Disney (USD 11.84 billion) and NBC (USD 10.27 billion),” said Tim Westcott, senior principal analyst at IHS Technology.

In original programming and acquisitions, other online platforms like Hulu in the US and China’s Youku Toudu, iQifyi and Tencent have also increased they investment.

“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,” Tim said.

“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.” he added.

Some of the key findings from the report include:

• 148 new scripted shows aired by basic cable networks in the United States were recorded last year. This is an Increase from 138 the year before and 96 in 2013.

• In 2016 so far, there have been 113 scripted basic cable shows, compared to 78 on the networks, 31 on premium cable, and 57 online.

To set these numbers in context: in 2012, there were only three online scripted US TV shows, that number rose to 20 in 2014, 41 in 2015.

Regional breakdown: US is a clear leader, but China rises to number two in APAC

“The primacy of the US in the worldwide programming market is clear,” Tim said. “We estimate that in 2015, the US represented 33 percent of worldwide expenditure on TV programming, with USD43 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.”

After the US, the mature Western European region is the next most important, investing UDD 38.6 billion, or just under one third of the total. The biggest markets in Western Europe were the UK with USD 10.7 billion, Germany (US$7.3 billion), France (US$6.6 billion) and Italy (US$4.6 billion).

“Notably, China is now the second largest market in the Asia Pacific region, with USD 8.4 billion invested last year,” Westcott said.

Japan is the largest in the region with $9.8 billion, followed by South Korea (USD 2.6 billion), Australia and India — both on USD 2.4 billion. Leading Latin American markets are Mexico (USD 1.5 billion) and Brazil (USD 1.4 million). Canada invested USD 3.4 billion last year. Russia and Turkey were both around the USD 900 million mark.

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