Peter Kafka

Recent Posts by Peter Kafka

It's Official: Epix, Netflix Announce "Multi-Year" Deal for Streaming Movies

Epix and Netflix, mum yesterday, are now happy to talk. The two companies have confirmed a big, expensive deal that gives Netflix the ability to show the pay-TV service’s movies on its streaming video offering.

The Los Angeles Times had previously reported that Netflix would pay Epix close to $1 billion over the life of a five-year deal; not surprisingly, the announcement from the two companies doesn’t mention price and describes the pact only as a “multi-year” one. There also seems to be a bit of a hedge in the release, which doesn’t say that Netflix gets all of Epix’s movies–just an “array” of them.

Still, it’s a major move for Netflix (NFLX), and undoubtedly a nice cash infusion for Epix, which has struggled to get carriage deals from traditional cable operators.

As I noted yesterday, this deal may make Netflix more competitive with cable, but it’s not designed to threaten Hollywood’s DVD business. Netflix still won’t be able to get consumers the movies over the Web until they reach Epix’s “window,” which means they’ll have been available on DVD for some time before that. Epix is owned by three big studios–Viacom’s (VIA) Paramount, Lionsgate (LGF) and MGM–and none of them wants to cut off their disc dollars.

Also important to note that the deal is designed to mollify Epix’s current and would-be cable partners, via another window–Netflix subscribers will have to wait 90 days after movies debut on Epix before these customers can get the movies over the Web.


NEW YORK and BEVERLY HILLS, Calif., August 10, 2010 – EPIX™ and Netflix, Inc. [Nasdaq: NFLX] today announced an agreement through which Netflix members can instantly watch an array of new releases and library titles from EPIX streamed over the Internet from Netflix. Movies from the multi-year deal will begin streaming from Netflix on September 1 and include movies from Paramount, Lionsgate and MGM.
EPIX has subscription pay TV rights to new releases and movies from the libraries of its partners and will make these movies available to Netflix 90 days after their premium pay TV and subscription on demand debuts. Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release.

For Netflix, the agreement is a significant step in building the company’s streaming offer, adding many popular movie titles from some of the world’s leading studios. It adds meaningfully to a growing library of movies and TV shows that can be watched instantly on TVs via a range of leading consumer electronic devices capable of streaming from Netflix and on computers.

For EPIX, the deal reflects the value of the EPIX platform which, from its start, has provided new rights and flexibility for the distribution of its movies. The agreement allows EPIX to continue the distribution of popular content on a variety of platforms and preserve the premium television, subscription on demand and online window reserved for cable, satellite and telco television partners.

“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. “The EPIX deal is an example of the innovative ways in which we’re partnering with major content providers to broaden the scope and freshness of choices available to our members to watch instantly over the Internet.”

Mark Greenberg, president of EPIX, added: “Netflix is an incredibly popular service and we welcome them as our newest distribution partner. We are pleased to be able to continue our mission of bringing consumers the movies where they want to watch them, while satisfying the differing needs of cable, telco and satellite operators. This deal also underscores the tremendous value of our offerings in the marketplace.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik