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Netflix is losing a whole bunch of movies, but it's all according to plan

Soon you will no longer be able to watch The Hunger Games: Catching Fire on Netflix.
Soon you will no longer be able to watch The Hunger Games: Catching Fire on Netflix.
Lionsgate

Netflix had some explaining to do on Sunday, as it announced that it would be letting its contract with cable network Epix lapse.

The press release, titled "Why You’ll See Some High Profile Movies Leave Netflix US Next Month," anticipated viewer panic. It acknowledged that subscribers would be losing such content as The Hunger Games franchise, World War Z, and Transformers: Age of Extinction. It even acknowledged that its subscribers are getting frustrated by what seems like a dwindling catalog of newer releases, but took the opportunity to remind people just how many original series and movies Netflix is currently working on — and hey, those are just as new, if not newer, so relax!

A few hours later, Hulu announced that it would be picking up the Epix contract instead.

This, combined with the impending mass exodus from Netflix's catalog, has sparked some worried chatter about whether the streaming service is losing what made it special. Part of the consternation stems from the fact that the inner workings of Hollywood licensing laws are notoriously sticky and confusing. It's not immediately obvious who owns what, which company is a subsidiary of whatever else, and so on. When movies leave your Netflix queue, it often seems more arbitrary than calculated.

Here's what the lapsed Epix contract means for your future binge-watching — and why it doesn't mean the end of days for Netflix at all.

Netflix losing a deal with Epix means losing content from MGM, Lionsgate, and Paramount

Epix is an on-demand subscription cable service that runs features, documentaries, comedy specials, and so on. It's owned by Studio Partners 3, a joint venture with Viacom, encompassing Lionsgate, MGM, and Paramount Studios. (Oh, what a tangled web Hollywood studios weave.) Netflix's deal with Epix meant that it could stream all the content Epix could, and thus, letting said deal lapse means that's no longer possible.

Netflix has had this agreement with Epix since 2010, and Variety reports that Netflix subscribers watch 75 million Epix movies monthly.

So after September 30, Epix movies will no longer be available on Netflix. In addition to The Hunger Games and Transformers franchises, this means saying goodbye to Star Trek: Into Darkness and Wolf of Wall Street, among others. As previously mentioned, though, they will all be available on Hulu starting October 1.

This isn't the first time Netflix has let a deal lapse, to the horror of many

In 2012, Starz declined to renew its contract with Netflix. People immediately identified beloved movies that would be pulled, from Toy Story 3 to Scarface to Robin Hood: Men In Tights. Mashable even called it "Starzageddon," like losing these movies would make the service a barren wasteland of straight-to-DVD failures.

When Netflix made the deal with Starz in 2008, access to the Starz Play catalog bolstered its reputation at a crucial time. By 2012, though, Netflix was a much bigger player in the streaming game. When Starz announced it would be pulling its titles, the New York Times reported that those movies only accounted for 2 percent of Netflix's total viewing. While this statistic was reassuring to subscribers, it was even more important for Netflix. It meant that the company knew that losing Starz Play was far from a crippling blow.

In 2012, Netflix had 21.7 million subscribers. By July 2015, it reported more than 65 million. Ultimately, neither Netflix nor its subscribers were too bothered by Starzageddon.

Netflix's Disney deal and aggressive emphasis on original content means its programming slate is less vast, but more curated

At this point, the panic around Netflix dropping deals is that the streaming service will no longer have the seemingly unending selection that made it popular in the first place. It teemed with titles, from old standards to nonsensical sequels. In short, Netflix was a Blockbuster you could frequent without ever leaving your house.

As more streaming services become available and target this model, however, Netflix has shifted its focus. It now puts less stock in quantity and more into creating its own distinct brand. As Netflix's press release on Epix stated over and over again, original content will be a constant presence on Netflix for the foreseeable future. Entire series drop at least biweekly, and this fall's programming slate includes several movies and specials from the likes of Adam Sandler (the already controversial comedy Ridiculous 6), Cary Fukunaga (the war drama Beasts of No Nation), and Sofia Coppola (A Very Murray Christmas, starring Bill Murray, naturally).

There is another significant factor that should help quell active alarm about Netflix's future. In 2012, Netflix made a deal with Disney that guaranteed streaming rights for all new releases once they left theaters and the Disney back catalog, starting in 2016.

While it seemed far away at the time, 2016 is now just around the corner. Also, a deal with Disney means a deal with the behemoth studios Disney owns: Pixar, Marvel, and LucasFilms. Plus, this deal is an exclusive one, which means that no other streaming service or cable channel (such as HBO or Showtime) can have the Disney movies Netflix can. This was not the case with Epix, which had also signed a deal with Amazon in 2012.

The kind of exclusivity the Disney deal affords is exactly the kind of step Netflix wants to be taking in its new quest for more curated programming — and exactly why it likely isn't sweating letting its Epix deal lapse. With its emphasis on original content and eyes on becoming a singular destination, Netflix is no longer content to be a video store stand-in.

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