Amazon and Epix signed a three year deal that would add around 3,000 movies to Amazon’s video streaming library. This would improve its standing in the market as it tries to compete against Apple and Netflix.
The announcement led to the drop of Netflix shares to as much as 11 percent. The news also came two days before Amazon is expected to launch a new tablet computer at an event near Los Angeles. According to the Amazon, the deal gives Amazon Prime Instant Video subscribers access to Hollywood big movies such as The Avengers, The Hunger Games, and Iron Man 2. These come from Epix’s Hollywood studio owners and partners.
According to an Amazon spokeswoman, the deal with Epix adds thousands of videos to their catalog but she declined to give more details regarding the deal. Amazon said that its Prime Instant Video service has more than 22,000 movies available. With the Epix deal, the number will be up to more than 25,000 movies.
Amazon is also expected to release a new version of its Kindle Fire table. This gives subscribers easy access to content such as movies and books. Analysts said that the new devices will provide seamless integration with the company’s digital content platform and cloud infrastructure.
Since 2010, Netflix has paid $200 million a year to get exclusive rights to Epix movies. The exclusivity deal expires this month but Netflix will continue to provide Epix movies until September 2013. Netflix has the option to extend its non-exclusive access to Epix movies through September 2014.
Netflix shares dropped 6.3 percent to close at $55.93 on Nasdaq. It has declined to as low as 53.13 earlier in the day, which was down 11 percent from its closing value Friday. With the deal, Amazon Prime members will have less reason to keep a Netflix subscription.