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Epix's Premium Movies Become a Hot Property for Netflix and Apple

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When Epix's Emil Rensing, who serves as the company's chief digital officer, first revealed the company's move into providing premium content online a few years ago, a number of us scratched our heads at the limited number of premium content titles that Epix offered. Events of the past few weeks, however, have revealed just how important these niche premium content libraries have become.

Netflix has retained exclusive rights to online streaming of Epix content, with Netflix chief executive Reed Hastings saying as recently as this week that the company continues to work with Epix to retain those exclusive rights.

In a letter to investors, Hastings said that the exclusive content deal with Epix -- which runs north of $200 million per year -- is important to both companies, and that Netflix is in a "broad ranges of discussions" to continue the content deal beyond its September 2012 expiration.

One reason that Netflix may be pushing Epix to define a renewed deal that, in Hasting's words, addresses "how to operate most effectively for both of us" is the growing interest in an Apple television.

In a recent YouGov.com survey more than one-fourth of respondents said they would be interested in buying an Apple-branded smart TV.

Based on that survey, as well as reports that Reuters published last week about Apple's interest in having access to Epix content for the rumored Apple smart TV product, it appears that Epix content trove may yield gold for its founding partners: Paramount, MGM Studios, and Lions Gate Entertainment.

At Epix's keynote for Streaming Media West in late 2009, prior to the Netflix exclusivity deal, Emil Rensing said that Epix's strategy was to increase its library of content offerings from within the vaults of its founding partners.

"We want to win the lean-back online, and we believe that pervasive consumption means that we don't limit choice. So we are listening to customer requests. One of those requests was to increase the VOD library offering by almost 1.7x in the past few weeks," said Rensing

Finally, with over one-third of smart TV owners saying they "spend more time watching TV through on-demand services than they do watching traditional linear TV," according to the YouGov survey, it's not surprising that Epix is also continuing to offer its EpixHD viewing option via EpixHD.com. This portal site, which requires a membership, requires online viewers to subscribe to the Epix channel on one of several cable providers in order to gain access to Epix movies via EpixHD.com

"You'll need to get Epix from one of these providers to watch movies," the EpixHD.com website states, offering options to sign up for Epix with Charter, Cox Communications, Dish, or Verizon.

With smart TV on-demand content viewing rising to the majority consumption method in the under-24 crowd (53 percent for 18- to 24-year-olds and 51 percent for homes with school-age children) it's no wonder Netflix is interested in maintaining the status quo.

Today, Epix continues to expand its offerings, with recent exclusive online movie offerings such as Rango, The Lincoln Lawyer, and, soon, Transformers: Dark of the Moon as an enticement to companies such as Apple or Netflix to create or develop licensing agreements with Epix.

For Apple, an Epix deal would be an end-run around the failure that it faced last year when it tried to secure streaming rights for future Apple television products.

"Apple unsuccessfully tried last year to secure agreements with Hollywood studios for movies and TV shows that it could fashion into its own version of a TV service, according to studio executives who were contacted," a Reuters article notes.

In other words, let the Epix games begin.

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