Period crime drama Ripper Street, axed by the BBC, will be returning for a third series on Amazon's video-on-demand service.

Amazon confirmed on Wednesday that filming on the third series will begin in May and be exclusive to subscribers to Prime Instant Video, formerly its LoveFilm VoD service, but will be aired a few months later on BBC1.

As part of the deal the first and second series are now available to Prime Instant Video subscribers.

The deal between Amazon and Ripper Street producer Tiger Aspect marks a significant moment for the UK TV industry – the first time a VoD operator has stepped in to fund a drama series after it was dropped by a major broadcaster.

Ripper Street, starring Matthew MacFadyen and Jerome Flynn, was dropped by the BBC last year. The reason given by the corporation was it "didn't bring the audience we hoped".

Tiger Aspect confirmed in December that it was in talks about alternative funding for the show, with Amazon tipped as being most likely to step in.

Confirming the return of the notorious H Division police precinct, set in Victorian Whitechapel, the head of Amazon Instant Video international content acquisition Jason Ropell said: "We're delighted to have secured not only the highly popular first two seasons of Ripper Street for our Prime Instant Video customers but we can also confirm today that we will be making season three, news that we know will delight the millions of fans of this brilliant British drama."

The US online retail giant announced earlier in February that it was rebranding its UK VoD service, LoveFilm, as Prime Instant Video.

The BBC will continue to put an unspecified amount of money into the show but as Ropell said "we've become the commissioning broadcaster" and Amazon Prime Instant Video customers will see the new episodes first.

Although Tiger Aspect head of drama Will Gould said the show will be delivered to Amazon by late autumn, no transmission date has yet been set, nor has it been decided if they will be available at once - as on-demand rival Netflix does for subscribers of its hits such as House of Cards.

Actress Myanna Buring, who plays Long Sally in Ripper Street, said the deal with Amazon was a "first for a British television show" and reflected the way more consumers view content, while Simon Vaughan from co-producers Lookout Point said it marked a "new paradigm" in the UK content production business.

Vaughan said it would be "business as usual" for the third series, with the same cast, same eight episodes and no sanitisation of the sometimes grisly violence.

However, ironically, the money from US company Amazon means that, for the first time, some scenes will be filmed in England, in addition to the usual set in Ireland.

Writer Richard Warlow revealed he is hoping for more series beyond the third and said that the new series will move forward and begin in 1894 and look at the development of the railways. It will continue the Jack the Ripper theme with a story involving the infamous McNaughton memorandum, which named three suspects in the case.

He also said the new arrangement will allow for "more bells and whistles" as he will not be writing exclusively for a BBC terrestrial audience.

MacFadyen said he was "surprised" when the show was axed by the BBC as he "thought it had legs" and said he is "delighted" Amazon has stepped in.

BBC controller of drama commissioning Ben Stephenson said: "This is an exceptional opportunity to bring back Ripper Street for a third series by working with a great partner."

Vice-president of Amazon Instant Video Europe Tim Leslie said the Ripper Street announcement marked a "very exciting day for us" and said "things are changing". He confirmed the company wants to work with more UK producers: "We want any and all to come to us. We just want great content … for our customers."

Although Ripper Street is a partnership with the corporation, recently BBC creative director Alan Yentob pointed out that companies such as Amazon are in "direct competition" with the BBC.

However, Leslie would not be drawn on, saying he was only "focused on bringing the best content and great shows to our customers."

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