Market Overview

Netflix Tanks as Amazon Scores The Avengers, Hunger Games

Netflix (NASDAQ: NFLX) is getting hit today after Amazon (NASDAQ: AMZN) announced a content deal with EPIX that will bring The Avengers, The Hunger Games, and other major movies to Amazon Prime.

The deal, which was officially announced this morning, means that content from Viacom's (NYSE: VIA) Paramount Pictures, MGM, and Lionsgate (NASDAQ: LGF) will come to Amazon's streaming video service. Disney (NYSE: DIS), which owns Marvel and The Avengers' movie rights, is not involved in the agreement.

Users will get to enjoy The Avengers anyway because of a former agreement with Paramount. Before Disney acquired Marvel, Paramount had signed a distribution deal with the comic book company to release The Avengers in theaters. That agreement transferred to Disney after the studio purchased Marvel. As a result, Paramount did not have to spend any money producing or promoting The Avengers, but it still gets to reap some of the financial benefits.

By teaming up with EPIX, Amazon Prime will now stream two of the top three highest-grossing films of the year, The Avengers (number one) and The Hunger Games (number three). Iron Man 2, Transformers: Dark of the Moon, Thor, Rango, Kick Ass, Paranormal Activity 2, True Grit, The Lincoln Lawyer, and Justin Bieber: Never Say Never are also included with the agreement.

Lionsgate investors responded favorably to the news, pushing the stock up more than three percent. The same cannot be said for Netflix, however, which traded down more than eight percent after the announcement was made.

Amazon said that it has been investing hundreds of millions of dollars to expand its Prime Instant Video library. Late last month the company announced an extended deal with Comcast's (NASDAQ: CMCSA) content producer, NBCUniversal.

At the same time, Netflix has struggled to gain new content after enduring a year of losses. In 2011, the company lost a major distribution deal with Starz that provided films from Disney and Sony (NYSE: SNE). If the agreement had been renewed, Netflix would have been able to stream the fourth- and fifth-biggest films of the year -- Sony's The Amazing Spider-Man and Disney/Pixar's Brave.

Netflix will, however, be able to stream the seventh-biggest film of the year, Madagascar 3: Europe's Most Wanted. That film is coming to the service as part of the content deal that Netflix signed with DreamWorks Animation (NASDAQ: DWA).

HBO Go and UltraViolet may be the only services that offer a streaming option for the second-biggest film of the year, Time Warner's (NYSE: TWX) The Dark Knight Rises. HBO Go is the online component to HBO (which is owned by Time Warner) and is currently tethered to cable subscriptions. UltraViolet is a streaming service that allows individuals to buy movies and stream them to any device.

Follow me @LouisBedigianBZ

Posted-In: Amazon Amazon Prime HBONews Contracts Intraday Update Movers Tech Best of Benzinga

 

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