In a new deal intended to pierce Netflix's armor, Amazon has announced a multi-year licensing agreement with Epix, which handles the online streaming rights to more than 3,000 movies from Paramount, MGM, and Lionsgate. The deal was inked shortly after Epix's exclusive contract with Netflix expired, and the new stable of movies, which includes recent hits like The Hunger Games and The Avengers, is a major boost for Amazon's nascent streaming business. The news comes at a bad time for the struggling Netflix, which has been in a continuous tumble since it raised fees and unsuccessfully split its streaming business from its DVD-delivery business last year. Does this latest deal give Amazon the advantage?
It's another blow to Netflix, and a big boost to Amazon: With the Epix deal, Amazon "has become a legitimate competitor to Netflix," says Rick Aristotle Munarriz at Daily Finance. Wall Street knows it — "shares of Netflix opened sharply lower on Tuesday" in the wake of Amazon's announcement. And Amazon's timing couldn't be better; the company "is widely expected to introduce new Kindle Fire tablets" on Thursday, which will be designed to make the Instant Video service easily available to any Amazon Prime subscribers who purchase a tablet.
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But Netflix is still on top: Compared with Netflix's PR woes last summer, losing Epix exclusivity "is not nearly so dramatic a blunder," says Ryan Tate at Wired. Epix content accounts for roughly 5 percent of Netflix's library, and those films won't disappear from the service; Netflix "will still have Epix content on a non-exclusive basis for another year, with an option to extend to 2015." And even with the addition of the Epix movies, Amazon Prime's streaming video options still "don't compare yet to Netflix's enviable library of content."
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Eventually, streaming old movies won't matter much anyway: Deals like this "make it harder for any one company to stand out," says Dorothy Pomerantz at Forbes. The competing streaming-video services are going through the same growing pains once faced by premium channels like HBO, Showtime, and Cinemax, which used to be "fairly interchangeable." In the end, those channels differentiated themselves not with "post-theatrical movies," but with original shows. Netflix is trying that, too, with the upcoming House of Cards and new episodes of the cult classic Arrested Development. That's the future of streaming.
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