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Look Out, Cable Guys — Netflix Is Gunning for You

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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.

Related content on GigaOM Pro: Three Reasons Hulu Plus is No Threat to Netflix (subscription required)

13 Responses to “Look Out, Cable Guys — Netflix Is Gunning for You”

  1. This works for me. I will downsize for basic cable (has sports) and dump all my premium movie channels. I save $70 per month by dumping HBO, showtime, Cinemax and now watch from Netflix streaming. Although netflix movie selection is older, there is more to choose from whereas with the premium channels, there’s one or two movies a month I really want to see. The netflix TV series addition are a bonus. ie. 30 rock, arrested development etc.

  2. Re: the sports channels.

    Now this is where the internet diverges from traditional programming.

    I have three Roku boxes, plus a blu-ray player that also has access to streaming content. I get access to Amazon VOD and Netflix Watch Now on all of the devices. I can also sign up for premium sports channel memberships, such as UFC and MLB. That’s in addition to the many channels that offer news and other content typically found on cable.

    For those few cable networks that don’t feed to Netflix Watch Now, I can also purchase TV series on Amazon VOD.

    All combined, I control what I access, and when.

    It’s the overall box-with-content that definitely makes all of this a strong and viable alternative to cable.

    I haven’t had cable for over a year, and I’ve not once missed it. How can I? Unlike cable, there literally is something on now I want to watch.

    Netflix has found its niche. It doesn’t need to be all-that-is-traditional cable. It’s not feasible for it to be, nor is it effective, either.

    It, in combination with the boxes and other services, is what is the way of the future.

  3. Shelley – You’re right, Netflix does have a pretty good TV series selection for streaming (and the movie selection isn’t so shabby either, depending on your tastes). There’s a lot missing though – as Chase Adams notes. My point was that acquiring more movies doesn’t necessarily make Netflix into a real cable competitor.

  4. Chase Adams has an excellent point. If Netflix wants to truly compete with cable TV companies, let us see if CEO Reed is willing to put his money where his money is and secure exclusive rights to the NFL, NBA, and MLB. He captures them and America will finally start cutting the cord.

    And what original TV content is Netflix producing/funding? Just running re-runs isn’t a strategy for taking on cable TV … or broadcast TV for that matter. They got to be content producers or fund content producers that give them exclusive airing rights to their stuff.

  5. The only reason I disagree with the fact that Netflix could get Cable guys: Sports. Everyone I talk to asks (when I tell them I don’t have cable): “Do you get sports? Do you get the news?” My response: “sports?”

    Sorry, but Netflix movie accessibility just won’t be enough…and sadly, the good movies and TV shows they have now are easy to run through quickly (because they’re instant stream) and the rest aren’t as impressive.

  6. Phoebe, Netflix Watch Now already as an incredibly strong TV series selection.

    For Sci-Fi fans, this month sees the addition of all of the Stargate SG-1 and Atlantis series, in addition previous month’s releases of Buffy, Firefox, X-Files, Sanctuary, Doctor Who, and so on. And that’s just in the sci-fi genre, not talking about all of the others.

    I have a 3-at-a-time plan, and I’ve had DVDs out for weeks at a time because I have so much to watch on Watch Now.

    Now, this new addition just adds that much more.

  7. I wonder, though, if Netflix can truly compete with cable companies by streaming mostly movies? It seems like a stronger selection of TV shows would have to be part of the offering too.

  8. Just rec’d my second Roku yesterday. For $9/mo I have streaming HD downstairs, SD in the bedroom, XBOX 360 in the basement, MacBook in kitchen, iMac in office plus iPad with iPhone and iPod Touch to come! Best deal going!