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Amazon’s ‘Grand Tour’ is just the start

The major release by Amazon Prime of the Clarkson-Hammond-May The Grand Tour motoring show, reportedly a $100 million investment, and hot on the heels of Netflix’s The Crown, again with a massive per-episode budget, is a sign of how the video industry is changing. The Grand Tour will be available in more than 200 markets in December.

IHS Technology’s Media & Technology Digest, in November said Amazon’s on-demand catalogue now leads the UK VoD market, with the biggest catalogue and lowest online movie pricing.

Globally, IHS says Netflix and Amazon invested more than $7.5 billion in 2015 on programming, which was a modest sum when compared to a global programming spend of $129,8 billion (and down somewhat on 2014’s $133.4 bn). But that apparent decline is mostly down to currency variations, says IHS Markit. Indeed, in 29 out of the 40 countries surveyed by IHS the spend on fresh programming rose.

The more revealing fact is that Netflix and Amazon together spent some $7.5 billion, more than many nations, and spread over original productions and programming/movie acquisitions. And that number is rising quite dramatically y-o-y.

IHS calculates that Netflix spent $4.9 billion in 2015 (up from $3.1 billion in 2014) while Amazon invested $2.7 billion (up from $1.6 billion in 2014). But both Netflix and Amazon are likely to see a significant rise in their programming investments. Amazon, for example, is partnering with a number of Indian film studios and production houses to create exclusive content prior to an Indian launch. Netflix, which launched in India in January 2016 is doing much the same.

There’s also a pricing battle underway. This past week Amazon trimmed £20 from its annual subscription fee (which meant until midnight on November 17th it was down to £59 a year).

Netflix is not standing idly by. On November 25th it will air its first episode of a much-loved US comedy-drama series Gilmore Girls: A Year in the Life. This is – in effect – Season 8 of the popular series and has been resurrected by Netflix, and the producers have turned the new series into four 90-minute episodes.

The show’s revival is typical of Netflix’s cheeky creativity. It has tapped into an extremely strong fan base for the Gilmore Girls, not all of whom will be Netflix subscribers. Helped by outstanding original shows such as House of Cards, Breaking Bad, Stranger Things, Narcos, Grace & Frankie and a dozen others – and mostly shot in Ultra-HD – the company will release around 126 original series or films during 2016. More than any other broadcast network, and at a cost of some $5 billion.

Amazon Prime is catching up fast, and helped by The Grand Tour. Both companies are benefitting hugely from today’s typical Smart TVs, with access to Netflix and Amazon Prime built into the set’s on-screen menus. Additionally, products such as Roku, games consoles and Chromecast make access easy. There are now millions of these new sets capable of handling 4K services, and a chronic shortage of ‘conventional’ broadcasters showing UHD material.

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