A huge technology corporation eventually acquired a huge legacy media company after years of waiting. MGM (Metro Goldwyn Mayer) Studios, an iconic studio, has been purchased by Amazon for $8.45 billion.
Amazon intends to expand its current on-demand video services by acquiring MGM, which owns over 4,000 films and 17,000 hours of television episodes.
To compete with Netflix, Disney+, Hulu, HBO Max, and the many other streaming services for eyeballs, Amazon needs more content for Prime Video. Purchasing MGM offers them access to classics such as “James Bond,” “Rocky,” “Real Housewives,” and “Survivor,” among others. With a full-fledged studio that has produced recent hits like “The Handmaid’s Tale” and “Fargo,” it also enhances its chances of creating greater originals.
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling,” Mike Hopkins, who heads Prime Video and Amazon Studios, said.
During Amazon’s annual shareholder meeting on Wednesday, CEO Jeff Bezos stated that the business is “really excited about MGM.”
“The acquisitions thesis here is really very simple: MGM has a vast, deep catalog of much beloved intellectual property,” Bezos said, “and with the talented people at MGM and the talented people at Amazon Studios, we can reimagine and develop that IP for the 21st century.”
The two companies noted that the transaction is “subject to regulatory approvals and other customary closing conditions.”
Despite the fact that streaming is a modest component of Amazon’s business, the corporation has recently concentrated on becoming a bigger participant in the entertainment industry. For example, a widely anticipated “Lord of the Rings” series is in the works.
Prime Video, which includes original and award-winning shows like “The Marvelous Mrs. Maisel,” is linked to Amazon’s massively successful Prime membership program, which has more than 200 million paid members and enables speedier delivery. With numbers like this, it’s a competitor to Netflix (NFLX), which has 208 million customers.
Amazon stated last month that over 175 million Prime customers have streamed TV episodes and movies in the last year. While paying a monthly subscription fee for a digital service seemed unique when Amazon introduced Prime in 2005, the rest of the world has finally caught on 16 years later.
MGM’s roaring lion emblem has appeared in front of some of Hollywood’s most renowned films, including “The Wizard of Oz,” but the studio does not have the same depth of franchises as other companies.
So why would Amazon be interested in MGM? Three words: Bond, James Bond.
The studio owns a stake of one of Hollywood’s most well-known film franchises, the spy franchise. Eon Productions also owns the Bond brand, which has amassed billions of dollars in box office receipts over the past 60 years. The films and its leading characters also reflect a way of life that spans the globe and pop culture. If Prime Video is to become the new home of James Bond, that’s a tantalizing prospect for potential customers.
In addition, “No Time to Die,” the latest Bond film, will be released in October after being postponed several times due to the Covid-19 outbreak.
On Monday, AT&T announced that CNN parent company WarnerMedia would be spun off and combined with Discovery. The deal brings together a slew of Discovery and WarnerMedia brands, including Warner Bros., Discovery Channel, HBO, CNN, and HGTV.
The acquisition of MGM by Amazon may not be as significant as the Discovery and WarnerMedia merger, but it is nevertheless significant due to MGM’s historical clout and Amazon’s reach and resources. But the most basic reason for Amazon’s desire to acquire MGM is that it has the financial means to do so.
The acquisition’s enormous price tag is of no significance to Amazon, which is one of the world’s wealthiest firms. Amazon has a market cap of $1.7 trillion after paying approximately $14 billion for Whole Foods in 2017.
In the end, the acquisition provides Amazon with more material, a well-known Hollywood studio, and a trendy super spy. That will only help it compete more effectively in the cutthroat world of streaming.