Netflix (NASDAQ:NFLX) has come a long way from its origins as a video rental business in the late 90s to the highly successful video streaming company with more than 62 million subscribers that we know today. One of the key pillars that has been driving Netflix’s subscriber growth in the midst of tough competition from the likes of Amazon (NASDAQ:AMZN) Prime (40 million subscribers) and Hulu (9 million subscribers) has been its popular high-quality original content. But that could now be in danger.

Netflix has announced that it will not renew its content deal with Epix. Epix signed a 5-year deal to supply original content to Netflix for a reported sum of $1 billion back in 2010. Netflix, however, is not happy with the deal because a clause in the contract allowed the deal to become non-exclusive just two years later. Epix became the provider of content for Amazon in 2012. Amazon Prime Instant Video has now emerged as a top competitor to Netflix. Netflix still leads Amazon Prime in most viewership categories. But Amazon has now overtaken Netflix in several key categories including number of U.S. subscribers (40 million vs. 39.1 million) and the number of times subscribers use the service, with Amazon Prime members using on-demand video 13.4 times per month compared to 12.7 times for Netflix.

Source: Investors.com

But perhaps what’s even more perturbing for Netflix investors is that Epix has inked a new content deal with Hulu, another top Netflix competitor, recently.

Content gap

Netflix signed a content deal with movie-producer Walt Disney (NYSE:DIS) in 2012 but won’t start receiving content from the company until 2016. This means that there will be a period of several months when Netflix subscribers won’t be able to access original content from the video streaming company. While Netflix is mostly downplaying the issue, reality could prove to be quite different.