Netflix's success is partly due to international expansion: it added over 10m overseas subscribers in the year to September. It also reflects its evolution from an archive of old films and TV shows into a hub of original programming such as House of Cards, Organe is the New Black and Daredevil. Indeed, it recently premiered its first original film, Beasts of No Nation, and plans to shell out a record $5bn (£3.3bn) on content in 2016. And it has disrupted the US pay-TV market by doing away with annual contracts and not forcing consumers to buy bundles of thousands channels to access the handful they actually want.
Arch-rival Amazon (US:AMZN) has adopted a similar strategy. The e-commerce titan has signed on acclaimed director Woody Allen to produce films for its Amazon Instant Video platform and hired Jeremy Clarkson to helm a Top Gear-esque car show. And like Netflix, a key selling point is that its subscribers aren't at the mercy of broadcasting schedules - they can watch their favourite shows whenever they want.
Competition from this new breed of broadcasters has pressured UK media companies to seek out premium, exclusive content to stand out from the crowd. For instance, Entertainment One (ETO) bought a majority stake in The Mark Gordon Company - creator of hit medical drama Grey's Anatomy - at the start of 2015. Meanwhile, The X Factor broadcaster ITV (ITV) acquired Talpa Media and plans to show the studio's flagship singing competition, The Voice, in 2017.
BT (BT.A) and Sky (SKY) have splurged billions to secure live broadcasting rights to Premier League and Champions League football. Moreover, the former has an exclusive deal with AMC - the home of hit dramas Breaking Bad and Mad Men - to carry Fear the Walking Dead and other new shows in the UK. Similarly, Sky recently inked a multi-year contract with Disney (US:DSY), and rolled out original dramas such as Fortitude and The Last Panthers. Its efforts helped to boost viewing of its Sky Atlantic channel by 70 per cent in the first quarter to 30 September.
What's the main takeaway for media investors? For now, content keeps the crown.
