Amazon wins big with deal to add 3,000 Epix movie titles

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Amazon.com (Nasdaq: AMZN), which continues to torch online video competitors like Apple (Nasdaq: AAPL) and particularly Netflix (Nasdaq: NFLX) with its Prime Instant Video Service, threw a blazing log on its fire by cutting a deal with Hollywood studio Epix to add about 3,000 movies to its burgeoning video streaming library.

The news that one of its former exclusive content partners had struck a deal with a hated rival drove Netflix stock down 11 percent at one point on Tuesday trading, before settling in at 6 percent down at just over $56. It took only three days--actually a holiday weekend--for Amazon to sign up Epix after an exclusivity agreement with Netflix expired Sept. 1.

Amazon crowed on its Web site that it now has access to flicks like "The Avengers," "Iron Man 2" and "The Hunger Games." An Amazon spokeswoman wouldn't tell Reuters more than that the deal would add "thousands" of titles to an Amazon library that's already touching 22,000.

The movies are likely to show up soon on the new Kindle Fire tablet which is expected to be unveiled tomorrow.

"Content is king--and Fire's killer app," Cullen Sebastian, an analyst at R.W. Baird told Reuters. "We expect new devices to provide further integration with Amazon's digital content platform and cloud infrastructure with movies, books and music."

It's not as if Netflix has lost its Epix content. While its exclusivity expired--and at $200 million a year since 2010 that's not a huge surprise--Netflix can still show Epix movies through September 2013 with an option to extend through September 2014.

Amazon did not disclose the terms of the deal, although the Amazon press release quoted Bill Carr, vice president of video and music at Amazon, as stating the online retailer is "investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers."

Epix, which Netflix CEO Reed Hastings noted "is not a particularly large source to total viewing" for his service, accounts for about five percent of Netflix viewing hours.

Still, Morningstar analyst R.J. Hottovy told Reuters, it's going to smart in more ways than one.

"It gives Amazon Prime members a lot less reason to also have a Netflix subscription," he said.

It also makes it less likely that Amazon might actually go out and buy Netflix as some have suggested might happen.

"The deal puts a significant dent in hopes of potential acquisition," Tony Wible, a Janney Capital Markets analyst wrote. "Given that Epix content is among the most expensive…Amazon would not likely want to pay twice for the same content."

As for Apple, the i-first company began talks with Epix earlier this year and, while Reuters had nothing new to report on that front, it did note there would be a major event Sept. 12 when Apple is expected to unveil its latest iPhone.

For more:
- see this story
- and this story
- and this news release

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