Home Business Amazon And EPIX Cut A Deal That Leaves Netflix In The Cold

Amazon And EPIX Cut A Deal That Leaves Netflix In The Cold

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On Monday, Amazon.com, Inc. (NASDAQ:AMZN) announced a new Prime Instant Video Agreement with EPIX.

Amazon And EPIX Cut A Deal That Leaves Netflix In The Cold

The U.S. multi-year licensing agreement will add thousands of new releases, classic library titles, and original programs to Prime Instant Video. This includes movies from EPIX studio partners, such as Paramount Pictures, Metro-Goldwyn-Mayer Pictures, and Lions Gate Entertainment Corp. (USA) (NYSE:LGF).

From the agreement between these two, it will more than double the number of titles available with Prime Instant Video, since the introduction of the Kindle Fire last September. This brings its library to more than 25,000 movies and TV episodes to watch through instant, unlimited streaming, without an additional cost for Prime members.

Prime Instant Video can be utilized on Kindle Fire, Roku, iPad, Xbox 360, and PlayStation 3. Only US customers have access to this.

Amazon.com, Inc. (NASDAQ:AMZN)’s expansion has been a work in progress. In the last 12 months, it has entered into a number of content agreements with each of the major Hollywood studios and some of the key cable networks. In May, Amazon signed a Paramount deal for movies, followed by additional ones with MGM, a broader NBCUniversal deal, and ESPN’s 30 for 30.

With EPIX, look for new titles to include The Avengers, Iron Man 2, The Hunger Games, Transformers, Dark of the Moon, Thor, and Rango.

Bill Carr, Vice President of Video and Music at Amazon, said of the expansion, “We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers. We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year. We are thrilled to be able to offer our customers such popular EPIX titles, many of which were just recently in theaters. We can tell from the data that our customers love watching movies on Prime Instant Video.”

From Amazon’s latest expansion, it again raises the competition against Netflix, Inc. (NASDAQ:NFLX). Upon announcing the news, its shares dropped 9.3 percent to $54.15, while Amazon rose 0.8 percent.

Netflix, Inc. (NASDAQ:NFLX) has faced its share of challenges this year. It still holds a large appeal with its $8/month subscriber fee. According to the New York Times‘ David Pogue, Netflix has 27 million streaming-video subscribers as compared to the 9 million DVD-by-mail members. Its video streams comprise 25 percent of all Internet data transmitted in North America.

For Amazon Prime members, they pay a $79 per year fee. In addition to the streaming videos, they get free two-day shipping on almost all purchases (or $4 overnight); there’s also a free Kindle e-book rental per month.

Prime Video also differs from Netflix, as it carries more recent videos. Many of Netflix’s movies are old–sprinkled with a few new ones–but its availability is more widespread and includes TiVo, Apple TV, iPhone, Nintendo Wii, Android phones and tablets, Nook color e-book readers, the Boxee box, Windows Phones, and more Blu-ray players and TV sets.

Or as the company likes to say, it is available on 900 models.

As noted by Pogue, Netflix is also the winner as compared to Prime, thanks to its movie selection, site clarity and playback features.

So if you’re worried about the company, it’s not dead yet but Amazon.com, Inc. (NASDAQ:AMZN) is doing its best to take it down a notch.

Stifel Nicholas has just released report titled; There are No Barriers to Entry; Here Comes Amazon Gobbling Up Content……

Stifel notes (emphasis ours):

This morning, Amazon.com announced a multi-year licensing agreement with EPIX to add the pay-TV network to their streaming service (Prime Instant Video). This deal follows the lapsing of Netflix’s exclusive streaming agreement of Epix which expires in mid-2013. As pointed out by our colleague Ben Mogil, it is likely that for at least one year both services will offer the EPIX content. We note that Amazon now has over 25,000 titles, perhaps 60% the number of Netflix in the United States we believe.

This news is another example of the competition that is mounting in the streaming business – specifically subsidized streaming – and one of the reasons that we believe Netflix’ business model is broken.

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Sheeraz Raza

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