Variety is reporting that Netflix may soon be taking over much of the digital portion of Epix business plan. The means that the film rental chain would exclusively distribute Paramount, Lionsgate and MGM's (which comprise Epix) slate of movies online during the pay-TV window that follows after DVDs are released.

Netflix is aggressively seeking distribution deals with those film rights holders.

If everything goes as planned, the tentative deal would last for five years. It would also boost "the number of films Netflix can stream to its subscribers on a variety of devices, including websites, videogame consoles and mobile devices like Apple's iPad."

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Overall, by building up the digital delivery side of the business, Netflix hopes that its movie-by-mail rental business will eventually become a thing of the past. Every time postage rates rise, Netflix feels it in their profit margin.

Netflix would pay out as much as $1 billion in licensing fees throughout the term of the deal. Representatives for Epix and Netflix declined comment Monday on the talks.

This would also be great news for Epix as generating revenue has been tough. It has been trying to find a place as a new pay cable movie option alongside HBO, Showtime and Starz. In recent months, they have inked deals with Dish Network, Cox, Charter and Mediacom.

In this deal, Epix would be platformed the way the Starz brand is in front of movies from Disney and Sony that Netflix streams.

Netflix currently has more than 15 million subscribers, while the numbers for Epix are much smaller. Epix is available in about 30 million homes.

Evan Jacobs