) announced a three-year agreement with Epix, extending its archive
of films on its streaming video site, Amazon Prime Instant
Epix is a premium cable channel with more than 15,000 titles
jointly owned by
) Paramount Pictures, Metro-Goldwyn-Mayer Pictures and
Lions Gate Entertainment Corp.
). It offers movies, classic titles, comedy, music and sports to
viewers across the country.
The online retailer has been consistently upgrading and
promoting movies and television shows on its streaming video
service. Over the past 12 months, Amazon has entered into a number
of deals with every major Hollywood studio, as well as some of the
major cable networks. Last week, the company inked a deal with
NBCUniversal, which took its total number of available videos to
more than 22,000.
The latest deal with Epix will expand Amazon's already-large
selection of movies available to customers as part of their Prime
membership. Amazon said that movies such as "The Avengers," "Iron
Man 2" and "The Hunger Games" will now be available on Prime. The
deal will add about 3,000 more movies to Amazon's video streaming
library, making it a significant force in the video streaming
segment and increasing competition for
Netflix had signed a five year streaming deal with Epix and paid
$200 million every year since 2010 for exclusive online rights to
Epix movies. The deal expired at the end of August, requiring the
company to either renegotiate the terms with Epix or allow the
rights to be sold to other Internet video services. Since the
announcement of Amazon's deal with Epix, Netflix shares have
Though this deal is a big blow to Netflix, threatening its
leadership in a growing market, Netflix's Internet video library is
estimated to have more than 60,000 titles, still far more than
We believe that one of the key strategies for Prime Instant
Video remains the expansion of its video archive. Amazon's vast
offerings at discounted rates ($79 per year for Prime video service
versus Netflix charges of $95 per year for its streaming video
service) could create a price war in the digital delivery of
movies. Amazon's additional advantage is a steady customer base,
since Prime offers several other advantages (related to online
shopping for example) compared to Netflix.
Amazon is one of the leading players in an extremely
fast-growing market. In the second quarter, Amazon's revenue of
$12.83 billion was better than the guidance and in-line with
consensus expectations. Management attributed the increase in
revenue to the growing consumption of digital content across
different categories because of the advantageous value proposition
Amazon was able to provide to its customers.
However, competition from
Barnes & Noble, Inc.
) remains strong.
Currently, Amazon has a Zacks #3 Rank, which implies a Hold
rating in the near term.
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