Netflix is announcing this morning that it has licensed both new release and catalog movies from premium cable network Epix for instant streaming. Epix is owned by and has rights from three studios, Paramount, Lionsgate and MGM. While the partners didn’t specify which movies are covered under the deal and digital distribution rights can be confusing, MGM is the studio behind the James Bond franchise, and Paramount is behind the Indiana Jones franchise, so among other titles, Netflix could be getting some major attractions with the deal.

Aside from its deal almost 2 years ago with Starz, the Epix deal is the most significant license Netflix has yet reached. It is also further evidence of how important Netflix, with its strong desire to gain content rights, is becoming as a Hollywood customer. The multiyear deal will kick in on September 1st.
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It is also a sign of just how confusing the pay-TV landscape has become, with traditionally cable-centric brands now converging with Netflix and other new distributors. Epix was begun 2 years ago, after these studios’ negotiations with Showtime fell through. Starting Epix was controversial as it meant higher carriage fees for cable, satellite and telco providers. Since its start, Epix has signed some distribution deals, with Verizon, Cox, Dish, Charter and others, but has failed to bring on Comcast, DirecTV and Cablevision which have specifically said they won’t distribute Epix.

No doubt this has caused Epix to search for other distribution avenues, with Netflix being the most logical. Though the deal specifies that Epix movies won’t show up on Netflix until 90 days after their debut on the Epix channel and on distributors’ subscription on demand debuts, the deal raises real risk that some Epix subscribers – who can now get these movies via their Netflix subscription – will drop the channel. This has been the same risk that Starz has faced, and though executives there have told me they’ve seen no evidence of subscribers dropping the service, at some point, particularly given the recession, it seems inevitable there will be some paring back.

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