Netflix, Epix confirm streaming deal

Five-year deal for online rights to Par, Lionsgate, MGM pics

Epix and Netflix made things official Tuesday morning, formally unveiling a deal that will allow Netflix members to instantly watch an array of new releases and library titles from Epix streamed over the Internet.

Movies from the multi-year, exclusive deal will be available as of Sept. 1. New titles will be available more quickly than usual -- 90 days after their premium pay TV and subscription on demand debuts.

The five-year arrangement gives Netflix the online rights to movies from Paramount, Lionsgate and MGM, the joint venture partners in the young pay TV movie channel.

As first reported by the Los Angeles Times, the deal could be worth $1 billion to Epix and will get it closer to breakeven. It also gives Netflix a leg up in the fast-growing world of online movie distribution. The pact includes such titles as "Iron Man 2," "Dinner for Schmucks" and "The Expendables."

Netflix boasts 15 million subscribers who routinely rent DVDs delivered by mail but more than 60% of them have at least tried online streaming, and it is getting easier everyday to stream them onto big television screens.

"Adding Epix to our growing library of streaming content, as the exclusive Internet-only distributor of this great content, marks the continued emergence of Netflix as a leader in entertainment delivered over the Web," said Ted Sarandos, chief content officer for Netflix.

Netflix has similar deals in place already with Relativity Media and Starz.

Janney Montgomery Scott analyst Tony Wible said in a report Tuesday that the cost for Netflix will create "near-term earnings pressure" on the company, which he expects it will try to reduce through various moves, including a focus on growing subscribers and reducing churn. But longer-term, the deal is key for Netflix as it "helps secure exclusive access to premium content," and content remains king, Wible argued.

While Wible highlighted the financial benefit for Epix and its owners, he also said it could hurt entertainment firms longer-term by encouraging consumers to "shift more of their available entertainment time" to Netflix and other online sources.

Paul Bond reported from Los Angeles. Georg Szalai reported from New York.
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