Netflix (Stock Quote: NFLX) has signed a deal with Epix, a pay TV channel launched in October by Paramount, MGM and Lions Gate Studios, to increase the movies available in its online streaming service.
Netflix will pay nearly $1 billion over the next five years to add major titles such as Iron Man 2 to its digital library just 90 days after they’re available to Epix’s premium pay TV and on-demand subscribers. The deal, announced Tuesday, goes into effect Sept. 1. The first crop of movies to be released will include G.I. Joe: The Rise of Cobra, The Pink Panther 2, The Curious Case of Benjamin Button and The Godfather trilogy.
"The Epix deal is an example of the innovative ways we’re partnering with major content providers to broaden the scope and freshness of choices available to our members to watch instantly over the Internet,” Ted Sarandos, chief content officer for Netflix, said in a press release.
The move is meant to help Netflix’s movie subscription service stay relevant in the face of declining mail subscriptions. Netflix currently makes the bulk of its profits by sending movie rentals through the mail, but the increasing popularity of on-demand cable channels, which lets consumers watch their movie choices instantly, is making the company bulk up its online offerings.
Netflix is also using its online streaming initiative as a way to reduce shipping expenditure. According to the New York Times, the company spent close to $600 million so far this year on postage.