Look Out, Cable Guys — Netflix Is Gunning for You

Netflix (s NFLX) boosted its streaming content by finalizing a deal with Epix that will give it access to a wealth of new movies for its online streaming service. The deal will make the subscription video company an even more attractive alternative to traditional cable services, as Netflix subscribers will now be able to stream even more movies that in the pay TV window.

Beginning September 1, Netflix will add movies like Iron Man and Star Trek to its streaming library, and it will get even more movies releases as they become available. The Epix deal could add 3,000 new titles to the Netflix streaming library, including films from Paramount (s VIA), Lionsgate (s LGF) and MGM.

The deal gives Netflix additional fodder with which to compete with the big cable companies, as it will have access to all the movies that Epix makes available to its pay TV distributors. While the broadband content won’t be available until 90 days after it hits the pay TV window that Epix has agreed to with its other cable, satellite and IPTV partners, that’s nothing compared to how long Netflix would have to wait if it wanted to license that content on its own. Rights to some of those films wouldn’t become available for up to nine years after they hit the pay TV window.

Epix offers a pay TV, VOD and broadband movie package to cable companies, and currently has deals with Dish Network (s DISH), Verizon FiOS (s VZ), Cox, Charter, Mediacom and the National Cable and Telecommunications Cooperative (NCTC), giving it access to 30 million homes in the U.S. The new agreement will be broadband-only, but will boost its current addressable audience significantly, as Netflix has 15 million subscribers, 60 percent of which watch movies from its instant streaming service.

Netflix CEO Reed Hastings has long said that the ability to add more and better streaming content is directly tied to Netflix’s ability to write large checks. Well now it’s writing those checks and becoming a formidable competitor both in the streaming space, and potentially against cable operators. In comparison to the $80 a month that most consumers spend on cable, Netflix is offering a competitive library of streaming content for just $9 a month, and that comes with the company’s DVD-by-mail service as well.

So far, the growth of its streaming library has paid off handsomely, as it’s substantially growing its user base and lowering its cost of its operations compared to its DVD-by-mail business. The ability to better manage those costs and add more content and customers means a strong future for Netflix as it moves from a DVDs to streaming.

Picture courtesy (CC-BY-SA) of Flickr user Titanas.

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