What can Amazon do to secure more exclusive content now that the streaming video race is about as crowded as it can get?
According to rumors, MGM, the renowned film studio that was a mainstay of Hollywood’s Golden Age, is apparently being bought by Amazon. As streaming competition becomes more severe by the day, a partnership would offer the tech firm a major brand to wield.
Amazon announced last week that a former executive, Jeff Blackburn, would return to the company to oversee businesses such as Amazon Studios and Twitch, and speculation is that part of his motivation for returning is the opportunity to manage MGM’s library.
MGM’s iconic roaring lion logo has played before hundreds of classic films, including the “James Bond” series, and the studio could be worth between $7 billion and $10 billion.
For a long time, there has been talk of a deal. Amazon has been rumored to be interested in purchasing a major entertainment property to enhance its streaming video service for years. Bloomberg reported in 2018 that it was in the running to buy Landmark Theaters, a niche movie theater chain. The Daily Mail speculated last year that it might buy AMC Theaters (AMC).
However, a studio, rather than a theater chain, gives a more clear and immediate benefit to Amazon, as MGM’s films and TV shows could readily find a home on Prime Video.
Prime Video, which offers original productions such as “The Marvelous Mrs. Maisel” and “Jack Ryan,” as well as other movies and shows for purchase, has a large audience. While Prime Video may be purchased separately, its major advantage is that it is part of Amazon’s enormously famous Prime club, which offers free shipping and other perks in exchange for an annual fee.
Amazon doesn’t give out many details about Prime Video. However, based on the current company’s most recent earnings report, Prime now has more than 200 million paid subscribers, with streaming hours on Prime Video increasing by more than 70% year over year.
The firm has already invested heavily in making Prime Video a more prominent selling point for its service. For example, a single season of a highly anticipated TV show set in the “Lord of the Rings” universe is said to cost $465 million.
Amazon has its sights set on the awards circuit as well. “Manchester by the Sea,” which was nominated for Best Picture at the 2017 Academy Awards, was distributed by Amazon Studios’ film division. MGM has lost some of its luster since award-winning films like “An American in Paris” in 1951 and “Ben-Hur” in 1959, but it remains a well-known brand.
Some MGM franchises have a track record of success at the box office. According to BoxOfficeMojo, “James Bond” is one of Hollywood’s most profitable series, with “Spectre” generating about $900 million worldwide in 2015.
In addition, the streaming market is becoming increasingly competitive. AT&T (T) announced on Monday that WarnerMedia, the parent company of CNN, would be spun off and merged with Discovery (DISCA). HBO, Warner Bros., HGTV, and Food Network would all be housed under one roof as part of the merger.
Meanwhile, Netflix (NFLX) continues to invest billions of dollars in building its own collection of episodes and films. In its first year, Disney+ attracted more than 100 million subscribers.
MGM is said to have a big price tag attached to it. However, with a market cap of roughly $1.7 trillion, Amazon is a business monster. Purchasing MGM might cost the company less than its first-quarter net income in 2021.