The figures are impressive: 63 million paying subscribers at the end of Q2 2015, a presence in over 50 markets, and viewing times up 50% in two years.

Netflix is unequivocally the global market leader for subscription video-on-demand (SVOD). Pioneering streaming since 2007, it struck gold at the dawn of a new era of over-the-top distribution, leapfrogging the established pay TV operators. Yet as Netflix commits to investing more in original content like House of Cards and Marvel Defenders Project, it looks set to reduce spend on third party content acquisitions.

Ampere Analysis predicts Netflix will have at least 130 million subscribers by the end of 2020. Its nearest SVOD rival Amazon will have nearly 50 million video users.

So at least 6% of households globally will be Netflix homes at the start of the next decade.

Netflix expects to invest nearly $5bn on acquired and original content in 2016, and Ampere anticipates this will grow by another $1bn in the subsequent two years.

Simultaneously, Amazon is ramping up its own content plans – licensing existing titles and generating new ones – like the new motoring show fronted by the former Top Gear team. Collectively, Ampere expects Netflix and Amazon to be spending over $9bn per year on acquired and original content by 2020.

Yet Ampere anticipates that Netflix’s investment in original programming will leave programme-makers a short window to maximise licensing agreements.

If Netflix aims to hit the 50% of spend devoted to originals hinted at in a recent investor call by 2020, its expenditure on acquired content could begin to fall as early as 2017.

But this focus on exclusive home-grown content has plusses – consumers are increasingly happy to double-up on subscriptions. Across the UK, US, and Germany, approaching half of Amazon Prime’s video user-base subscribe to both Netflix and Amazon, evidence that it is content, not cost, that drives subscriptions priced at $10 or less per month.

Pay TV operators have enjoyed almost three decades of solid growth, yet now the tide has turned. Consumers are defecting, “cord-cutting” from the traditional Pay TV companies in favour of digital video services. Ampere Analysis’s own figures show that as personal TV viewing time increases – whatever the channel or device – net additions of new subscribers to Pay TV services are in decline, while SVOD is growing. In 2015, over 41 million new customers took SVOD worldwide, the highest figure yet. By comparison, Pay TV net additions have been in decline since 2011, and will reach just over 23 million worldwide this year, the lowest figure for over 10 years.

Subscribers to both SVOD services (Amazon and Netflix) experience little content duplication as the two players have very different approaches to content acquisition – and this defines their brand propositions too. Overall Netflix’s content is typically more recent as it opts for high profile titles earlier in their release cycle. As of August 2015, by Ampere Analysis estimates, 11% of Netflix’s movies were released in 2013, and 9.5% in 2014. It’s the same for TV shows: Netflix has twice as many titles released in 2015 as Amazon Prime. These include high profile shows from big brand producers – Disney, Fox, NBC and BBC. Perhaps it’s not surprising then that Netflix spent over $3.1bn on content in 2014, compared to Amazon Prime’s bill of $1.3bn.

Amazon Prime, by contrast, has a heavier focus on a larger library of older titles: 18,000 movies and 4,500 TV shows versus Netflix’s 11,300 movies and 5,500 TV shows. There is also evidence of differentiation along genre grounds – Netflix has focused on drama, action, crime and comedy, Amazon Prime tends towards documentaries, family and kids movies and music.

“The differing title acquisition strategies have allowed each provider to thrive in its own content niche – consumers are quite happy to spend on both Amazon Prime and Netflix. Netflix subscribers across the US, Germany and UK are over 60% more likely than the average internet user to also watch videos via Amazon Prime,” commented Richard Broughton, research director at Ampere.

On a recent earnings call Netflix indicated that it aims for 50% of its business to revolve around its own content. Creating its own programmes offers numerous advantages: exclusivity, quality control, reduced marketing and sales costs, multi-market availability and appeal, and tailoring to customers’ viewing behaviour and preferences using big data analytics (even down to the background colour used on the opening credits).

These benefits come at a cost. Recent favourites House of Cards and Marvel Defenders Project cost an estimated $3.5m per episode (see chart). Rival Amazon Prime is also prepared to pay for its own content, and top of the summer 2015 shopping list was a $250m bill for a new show fronted by the former stars of BBC’s Top Gear. Ampere estimates that collectively, Amazon Prime and Netflix will be spending approaching $2bn on original content in 2016.

Yet increased spend on originals has implications for content suppliers. Ed Aked, Analyst and author of the report, says: “Within the next two years we expect Netflix’s spend on acquired content to plateau in favour of original material. So the gold rush content producers have mined by selling their back catalogues to the streaming services looks set to dry up by 2018. It is content, not cost, that wins in SVOD. The battle for new subscribers is going to be as calculated, tactical and unforgiving as any political drama.”

Unique demographic data from Ampere Analysis’s own research provides insight into who is viewing SVOD across the UK, US, and Germany. Almost one quarter of Netflix’s audience is 18-24, while Amazon Prime has more 25-34 year olds. SVOD services as a whole skew to higher income households – 41% of Netflix subscribers and 45% of Amazon Prime users fall into the $60,000+ per annum income bracket, as opposed to roughly 30% of the market average.

11 million households in the three markets take both services – that’s around half of Amazon Prime’s video user-base also taking Netflix. The relatively low price-point of a monthly SVOD subscription – around $10 – makes this possible. The overlap can be attributed to the different content catalogues of the competing services – underlining how good programming and user experience can encourage existing users to double-up on subscriptions.