Tech Titans: Corporate Leaders at the Forefront of Digital Transformation
Corporate leaders today stand at the nexus of unprecedented technological evolution, where digital transformation reshapes industries and redefines …
May 27, 2021: On Wednesday, Amazon said it would acquire MGM Studios for $8.45 billion, marking its boldest move into the entertainment industry and turbocharging its streaming ambitions.
The deal is the second-largest acquisition in the history of Amazon, behind its $13.7 billion purchase of Whole Foods from 2017.
Amazon hopes to leverage MGM’s storied filmmaking history and wide-ranging catalog of 4,000 films and 17,000 TV shows to help bolster Amazon Studios, its movie, and TV division.
“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,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios, in a statement. “It’s fascinating and provides so many opportunities for high-quality storytelling.”
The deal emphasizes Amazon’s willingness to spend deeply to remain competitive in the crowded streaming market. Amazon, Netflix, Disney, and other video streaming services have been looking to beef up their content libraries to win over subscribers, commit billions toward licensing content, and develop original programming.
Meanwhile, media juggernauts have undergone further consolidation to achieve a grander scale to take on the likes of Amazon and Netflix. Discovery’s $43 billion deal to merge with Warner Media after a spinoff from AT&T, announced last week, is the latest symptom of that.
Amazon has long been willing to make significant investments in video content as a strategy to buoy Prime memberships, which now surpass 200 million globally. It spent $11 billion on video and music content last year, up from $7.8 billion in 2019. CEO Jeff Bezos has argued that these investments reinforce Amazon’s “flywheel effect,” in that it attracts more Prime subscribers, who in turn tend to spend more on the site.
Amazon has also made an aggressive push into sports content, inking a deal with the NFL in May to broadcast Thursday Night Football starting in 2022.
Amazon has a seasoned representative in Hollywood. The company announced last week that it would bring back Jeff Blackburn, formerly a top lieutenant to Bezos, to oversee a new Global Media & Entertainment division, which consolidates its entertainment offerings under one heading, including Prime Video, Amazon Studios, its music and podcasting businesses, Amazon Games and Twitch.
MGM will make Amazon’s TV and film library even more robust. The Hollywood studio owns the James Bond catalog, and its studio has produced several hit shows, including “The Handmaid’s Tale” and “Fargo.” It also owns premium cable network Epix and holds several popular reality TV shows, including “Shark Tank,” “Survivor,” and “The Real Housewives” series.
The MGM deal could heighten antitrust concerns for Amazon. The company faces ongoing probes by multiple federal agencies, state attorneys general, and Europe’s antitrust watchdog. The House Judiciary antitrust subcommittee issued a comprehensive report last October that found Amazon has monopoly power over third-party sellers on its marketplace.
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