Wednesday, September 5, 2012

Netflix, Inc. (NASDAQ:NFLX) Plunged As Amazon Closes Deal with Epix

Amazon.com, Inc.(NASDAQ:AMZN) has joined hands with Hollywood studio partnership Epix, thereby adding over 3000 movies to the formers’ video streaming library. This maneuver will no doubt give Amazon an edge over rivals Netflix, Inc.(NASDAQ:NFLX) and Apple. Till a week ago, Amazon had stated that its Prime Instant Video service had more than 22,000 titles to stream, but the Epix deal increased the figure to over 25000.

Amazon Prime Instant Video subscribers will be able to see movies from Epix studio partners like Viacom Inc's Paramount Pictures, Metro-Goldwyn-Mayer Pictures, and Lions Gate Entertainment Corp, such as "The Avengers," "Iron Man 2" and "The Hunger Games". Amazon’s timing of clinching the deal couldn’t be better as it is planning to release an upgraded version of its Kindle Fire Tablet. Now, users will be able to access more movies than ever, thanks to the agreement with Epix!

Ever since 2010, Netflix had been shelling out $200 million a year as for gaining exclusive rights to movies from Epix. The agreement will expire this month, although Epix movies will be played till the end of September. Netflix shares plummeted by 6.35% to $55.93 on Tuesday.

Can NFLX Bounce Back After The Slump Period? Find Out Here

Netflix CEO Reed Hastings has stated in July that Netflix would not be affected too much even if Epix movies are being run on rival services. This is because Epix contributes to a very small portion of total viewing at 5%, according to Netflix spokesman Joris Evers. The major segment of viewing is dominated by shows like "Mad Men" and "Breaking Bad”.

Tony Wible, an analyst at Janney Capital Markets, attributed the weakening of Netflix shares to the fact that it eliminates the possibility of Amazon acquiring Netflix in the near future. Content from Epix comes with a hefty price, and Amazon will not shell out twice to obtain same content. Apple, which competes with Kindle Fire when it comes to iPad, had indulged in talks with Epix to extend its product offerings into a TV set, but as of now there is no news from that end.

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