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Amazon purchases MGM for $8.4B. What will it do with it?

By Nadeem Sarwar May 26, 2021, 9:35 pm
amazon mgm deal

Amazon has inked a deal to acquire one of the world’s oldest and most renowned Hollywood studios, MGM (Metro Goldwyn Mayer) – yeah, the one with roaring lion logo – for a cool $8.45 billion. The goal of this massive deal? Bolstering its Prime Video ambitions, of course. The deal is now pending regulatory approval and is expected to close by the end of 2021. However, anti-trust concerns and calls for canceling a monopolistic move have already started to surface on social media.

Amazon is in a relentless pursuit for new streaming content

The e-commerce giant notes that the real financial value of the deal is in the potential of turning the vast catalog of movies and TV shows owned by MGM into an IP that will spawn a ton of fresh content for Prime Video. The company has made it clear that it wants to reimagine MGM’s content for its existing audience of over 200 million Prime Video users.

MGM is currently home to over 4,000 movies that include hit franchises such as James Bond, Rocky, Tomb Raider, Robocop, and Silence of the Lambs, alongside approximately 17,000 TV shows. With a tally of over 180 Academy Awards under its belt, the MGM library will provide Amazon an opportunity to not only boost the Prime Video catalog, but it will also act as a treasure trove of IP that the company can cherrypick to create spin-offs and reboots.

Regarding the acquisition, Amazon chief Jeff Bezos mentioned that it opens the doors for the company to re-imagine MGM’s content for the 21st century. But at the heart of it all, Amazon also doesn’t want to lag behind in the white-hot streaming wars in the face of deep-pocket rivals such as Netflix and HBO Max.

Earlier this month, AT&T spun off Warner Media and merged it with Discovery to create a media conglomerate in a deal valued at roughly $43 billion. The MGM deal is not Amazon’s biggest acquisition, but the company has been spending generously on its video and music content – with last year’s tally standing at $11 billion.

Where is Amazon heading with the MGM deal?

As mentioned above, the direct beneficiary of the acquisition is Prime Video which is going to become the new home for MGM’s vast catalog. While the movies and TV show library owned by MGM is impressive, Amazon will actually treat it as a goldmine for creating new content.

james bond
Protagonists of the Bond franchise over the years. (Image: MGM)

Amazon will try to milk popular MGM franchises like James Bond

The crown jewel, however, will be the James Bond franchise. The spy series is one of the most high-profile movie franchises in Hollywood, raking in billions of dollars over the past few decades. Even though MGM only partly owns it, Prime Video will get a major boost simply with the franchise’s potential exclusive availability in its catalog.

It is too early to predict whether Amazon can secure the rights to make spin-off content and milk more money from the spy series, but the prospect of exclusively hosting the next Bond film – No Time to Die – starring Daniel Craig in his last outing as the iconic character will be a major move. We’ve already seen services such as HBO Max (courtesy Zack Snyder’s Justice League) and Peacock driving subscriber growth riding on the popularity of just one franchise – The Office.

After scoring Oscar nods with critically-acclaimed films such as Manchester By The Sea and Sound of Metal, Amazon has lately leaned more towards blockbuster cinema. The company recently paid hundreds of millions for securing the rights to Coming 2 America and the upcoming Chris Pratt-led The Tomorrow War.

On top of that, the upcoming Lord of the Rings show – touted to be the most expensive in TV history – is a clear sign that Amazon is not shying away from spending big. Netflix, for example, has been riding high on the success of original content like Stranger Things and even licensing popular video games like The Witcher to create a wildly popular TV show.

Prime Video is upping the ante against the likes of Netflix

With film and TV studios lately finding new homes under billion-dollar media conglomerates that are not hesitant when it comes to spending big, Amazon definitely doesn’t want to miss out on an opportunity for boosting its Prime Video efforts. By the time of its acquisition, MGM already had a slate of IPs in development that will now be developed under Amazon’s roof.

But at the end of the day, Prime Video will focus more on making millions by creating new content from MGM’s catalog rather than simply sitting on the pile as yet another addition to its streaming service. And with billions of dollars in its coffers, Amazon is one streaming player that can afford to experiment and spend big.

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