Strike another nail in the coffin of brick-and-mortar video stores.
Netflix has agreed to pay $1 billion over the next five years for the online streaming rights to movies from Paramount, Lionsgate and MGM. Originally a mail-order movie service, Netflix has been working on boosting its online streaming library as people turn to high-speed Internet connections to download movies instantly. As an added bonus, Netflix saves on postage costs.
The deal also makes the three studios' joint pay TV venture, Epix, immediately profitable. It's helping Netflix's shares as well, which closed yesterday up 7 percent at $125.01.
Netflix's stock price has quadrupled during the last two years as subscribers nearly doubled to 15 million. Not doing as well are traditional video stores such as Blockbuster, which was recently de-listed from the New York Stock Exchange as its shares are worth practically nothing.
Epix is a pay TV channel launched last October by Paramount, MGM and Lions Gate. It holds subscription pay TV rights to new releases and movies from its partners' libraries. Netflix is getting the rights to stream movies 90 days after they appear on Epix, which is offered through subscription TV providers such as Dish Network and Cox.
Investing in Emerging Markets
Learn to invest in a globalized world.View Course »