Earlier today we reported that Amazon had inked a multi-year EPIX deal to bring thousands of films – including The Avengers and Hunger Games – to Prime Instant Video. And in the immediate aftermath of this announcement, Netflix shares tumbled. But wait a minute, why would this hurt Netflix so much?

Just to recap, EPIX is a joint venture between Viacom Inc (well, its Paramount Pictures unit), Metro-Goldwyn-Mayer Studios (MGM) and Lionsgate. It’s a premium entertainment network, delivering movies, classic titles, original films, comedy, music and sports to viewers across the country. But here’s the thing, it had previously signed a five year streaming deal with Netflix, the first two years of which were exclusive – but the Amazon deal signaled the end of this exclusivity, thus it’s one less reason for folk to pay attention to Netflix. As far as the stock market’s concerned, at least.

“We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers,” said Bill Carr, Vice President of Video and Music at Amazon. “We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year. We are thrilled to be able to offer our customers such popular EPIX titles, many of which were just recently in theaters. We can tell from the data that our customers love watching movies on Prime Instant Video.”

Amazon’s subscription Prime Instant Video service, which is where EPIX content will be made available, is available for Kindle Fire, Roku, iPad, Xbox 360 and other connected devices – and the PlayStation 3 finally got it back in April too.

Shares fell 10% in Tuesday trading which is thought to represent around $300m value, though it remains to be seen whether this is a temporary set-back and the shares will recover, or the impact of losing such a lucrative exclusive will be longer lasting.