×
You will be redirected back to your article in seconds

Netflix Losing Flicks: Why It’s Actually Smart to Shed ‘Hunger Games,’ Other Epix Movies

The “flix” part of Netflix is about to get less precise: Thousands of movies through its deal with Epix, the JV of Paramount, Lionsgate and MGM, are set to roll off the streaming service when the pact expires next month.

It’s sure to cause the subscription VOD leader some short-term pain with customer irritation and confusion. And Reed Hastings can’t be pleased that Hulu is opportunistically stepping into the breach with Netflix’s pass (though Amazon, it’s important to note, has had a pact with Epix since 2012 for exactly the same stuff).

But for Netflix, letting this deal go by the wayside is ultimately a savvy move.

The loss of the Epix catalog is real. Of the top 10 box-office grossing movies in each the last three years, Netflix currently offers just two on streaming — both via Epix: “The Hunger Games: Catching Fire” and “Transformers: Age of Extinction.” In the most recent quarter, Netflix subs have streamed an average of 75 million Epix movies per month, according to a source familiar with the pact, which would represent about 1.8 movies per U.S. sub monthly.

It’s not that Netflix doesn’t want movies. It’s that it wants exclusive rights, with titles you can’t watch on any other subscription service. That’s why Netflix is spending more on original film acquisitions, and why it’s paying Disney top dollar for pay-TV window rights for Mouse House pics starting with 2016 releases.

Given Netflix’s trajectory, its pact with Epix was doomed. Netflix calls itself an Internet TV subscription service and compares itself to HBO… and so, by extension, it’s also really a competitor to Epix.

In a certain light, then, Netflix carrying the movies from Epix is like McDonald’s cutting a deal to sell Whoppers.

Make no mistake: Epix wanted Netflix to renew, though Hulu presumably will help make up the difference. For Epix, which employs the traditional cable-distribution model, the more distributors it has on board the better. It sells through cable, satellite and telco TV providers and carved out an additional SVOD window, with titles coming to Netflix (soon to be Hulu instead) and Amazon 90 days after they hit TV distribs.

That’s fine. But Netflix decided a while ago it doesn’t want sloppy seconds to pay TV. Yes, non-exclusive library content is important to buttress the proposition that there will always be something to watch in your Netflix queue, including TV and movie favorites. The company’s infamously inexpensive output deal with Starz in 2008 (which ended in 2012) certainly helped jump-start Netflix’s meteoric rise.

Now Netflix is about quality — or, more accurately, exclusivity — not quantity. Last year, for example, it didn’t bid for SVOD rights to HBO’s library (for series three or more years after their network airdates) which remain available on HBO Go and HBO Now; instead, Amazon acquired that basket.

See More: Netflix to Focus on Adding Higher-Rated and Exclusive Titles, CFO Says

Netflix has eschewed the notion of being a comprehensive on-demand entertainment source, because it’s just too expensive. Live TV sports? Forget it, Ted Sarandos says; leave that to overpriced pay-TV bundles. And if you want movies or TV shows not available via streaming, Netflix will happily sell you a DVD-by-mail subscription.

“Netflix is a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United; HBO, not Dish,” the company says in its long-term view manifesto.

That’s a smart, sustainable strategy for standing out in the market. True, Netflix at some point soon will have to decide which content it must own itself instead of rent (originals including “House of Cards” and “Orange Is the New Black” are licensed from other studios, not produced by Netflix). And nobody can possibly argue that Netflix original films like indie drama “Beasts of No Nation” or Adam Sandler’s “Ridiculous Six” are going to outperform top Epix-supplied fare like “Hunger Games: Catching Fire,” “The Wolf of Wall Street” or “Star Trek Into Darkness.”

In Epix’s case, Netflix decided its money would be better spent elsewhere rather than paying up to $200 million per annum (though its fees to Epix went down after the rights became non-exclusive). Because if you’re Starbucks, it makes more sense to place your bets on creating the next Frappucino, not on moving Big Gulps.

More Biz

  • Discovery CEO David Zaslav Sees 2018

    Discovery CEO David Zaslav Sees 2018 Compensation Soar to $129.4 Million

    Discovery Inc. president-CEO David Zaslav is once again making headlines for an enormous compensation package. Zaslav’s 2018 compensation soared to $129.44 million in 2018, fueled by stock options and grants awarded as the longtime Discovery chief signed a new employment contract last July that takes him through 2023 at the cable programming group. Zaslav received [...]

  • Jonathan Lamy RIAA

    Jonathan Lamy Stepping Down From RIAA

    Jonathan Lamy, the Recording Industry Association of America’s longtime executive VP of communications and marketing, is stepping down from his post after 17 years, he announced today. As he put it in an email to Variety, “I started back in 2002, which means it’s been 17+ years, four different RIAA CEOs, three format changes and [...]

  • Fox Layoffs

    Disney-21st Fox Layoffs: TV Divisions Brace for Deep Cuts

    A second day of layoffs has begun on the Fox lot in the wake of Disney completing its acquisition of 21st Century Fox on Wednesday. Longtime 20th Century Fox Television Distribution president Mark Kaner is among the senior executives who were formally notified with severance details on Friday morning. 21st Century Fox’s international TV sales [...]

  • anthony pellicano

    Hollywood Fixer Anthony Pellicano Released From Federal Prison

    Anthony Pellicano, the Hollywood private eye whose wiretapping case riveted the industry a decade ago, was released from a federal prison on Friday, a prison spokeswoman confirmed. Pellicano was sentenced in 2008 to 15 years, following his conviction on 78 charges of wiretapping, racketeering, conspiracy and wire fraud. He had been in custody since 2003, [...]

  • This image taken from the Twitter

    HBO’s Reaction to Trump’s ‘Game of Thrones’ Campaign

    Everyone wants a piece of the “Game of Thrones” lemon cake. From Bud Light to Red Bull the world of Westeros is open to a lot of brand partnerships, unless you’re using that iconic typeface to push a political agenda. In November of 2018 President Donald Trump unveiled a “Thrones” inspired poster with the words [...]

  • Leaving Neverland HBO

    'Leaving Neverland' Lawsuit Proves to Be a Judicial Hot Potato

    The Michael Jackson estate sued HBO last month for airing the documentary “Leaving Neverland,” which accuses the late King of Pop of serial child sexual abuse. Since then, the case has had a difficult time finding a judge to handle it. Three federal judges have recused themselves in the last week, citing potential financial conflicts [...]

  • Members of the public mourn at

    Guy Oseary’s New Zealand Fundraiser Nears $150,000, Continues Raising Money

    In the wake of the horrific shootings at New Zealand mosques last week that killed some 49 people, Maverick chief Guy Oseary launched a GoFundMe campaign to “support those affected by this tragedy at this very difficult time,” and began it with an $18,000 donation. Boosted by donations from many celebrities — including Amy Schumer, [...]

More From Our Brands

Access exclusive content