Amazon, MGM & Big Tech vs Media
Amazon announced its purchase of the iconic MGM Studios for $8.45 Billion, completing a deal which signals a power shift between Big Tech and Big Media
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Hi Everyone,
Last week, we wrote about how Amazon was rumored to complete its purchase of the iconic MGM Studios- home to the James Bond and Rocky Franchisees- Check it out here.
Yesterday, that deal was finalized, with Amazon paying roughly $8.45 Billion plus debt, and pending regulatory approval. This marks the second-biggest acquisition for Amazon after Whole Foods, which was completed at $13.7 Billion. Here’s a list of Amazon’s biggest buys so far 👇🏻
Big Tech companies like Apple, Amazon, Netflix, and Facebook have been eyeing Big Media companies for a long time, but this is the first such deal that has come to fruition and could potentially signal a major power shift in the Entertainment industry for years to come.
Which begs the question- Why Amazon? Why MGM? And, just as important: Will regulators let it happen?
The answer is simple.
The media world is consolidating and there aren’t many targets left for a would-be acquirer. Amazon has spent many billions on video without much to show for it, and thinks owning a studio — and, crucially, the rights to the intellectual property the studio owns — could help it create huge movies and TV shows.
Not so much because it wants to own streaming, but because it wants you to keep coming back to Amazon. MGM, meanwhile, has been trying to sell itself for years. It had announced back in December 2020 that it was trying to sell itself for around $5 Billion. It ended up doing just that for roughly twice as much money. Not bad right?
MGM has a catalog with more than 4,000 films and 17,000 TV shows and CEO Jeff Bezos said that Amazon is "really excited about MGM" during the company's annual shareholder meeting on Wednesday.
"The acquisitions thesis here is really very simple: MGM has a vast, deep catalog of much-beloved intellectual property, 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.
Amazon has been making and buying its own TV shows and movies since 2013 — the same year Netflix got into streaming its own stuff with House of Cards. However, it has struggled to keep up with Netflix when it comes to user acquisition and retention.
Which gives you a sense of how all over the place Amazon’s efforts to break into Hollywood have been, despite the fact that Jeff Bezos has spent a lot to make it happen.
Bezos is still trying, though: Amazon is sinking at least half a billion dollars into a Lord of the Rings TV show, and $10 billion over 10 years to show the Thursday Night NFL game once a week.
![Lord of the Rings Trivia [02/06/20]](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fde7fb6cc-b867-4ef3-befd-978188a11d8e_1920x1080.jpeg "Lord of the Rings Trivia [02/06/20]")
So does that mean Amazon is finally getting ready to take on the streaming heavyweights — Netflix, Disney, and maybe WarnerMedia/Discovery?
Probably not.
The company is indeed more serious than ever about video streaming. However, it’s playing a different game than the “real” streamers. Amazon doesn’t want to compete with Netflix or the other streaming platforms for watch time and subscriber dollars. It just wants you to watch videos and spend some money.
Confused?
That’s because all of Amazon’s “premium” video is bundled into its Amazon Prime subscription offer, which gives you free shipping and other goodies. It is Amazon’s most powerful weapon. For years, Bezos has said that giving you stuff like Jack Ryan or the Marvelous Mrs. Maisel- both Amazon Originals; to make you that much more likely to stick around and order a pair of shoes — or at least keep paying for Prime.
Bezos has long felt that he always knew the formula to make a TV show work. This is him breaking it down 👇🏻
Our take on this?
It’s not that simple. While a lot of the points which Bezos mentions above are probably true for a TV show, it is tough to formulate creativity, and Amazon learned it the hard way with underwhelming responses to its Original shows.
Do they care? Not really.
Amazon doesn’t want to dominate Hollywood. It just wants a toehold. But even that toehold has been hard to get, and Bezos has been adamant for a while that the way to get it isn’t via niche shows like Jack Ryan anymore — it’s by buying or making big blockbusters that lots of people will watch.
Snapping up MGM and with it, the James Bond and Rocky franchisees might just be the perfect start to it.
Who knows, with Bezos stepping down as Amazon CEO in a month and the next James Bond not decided yet, he might just give it a shot- after all, he owns it now. 😉
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