Amazon’s MGM Deal Adds to the Content Whirlwind

For some, a rush to get in. For others, a rush to get out

On 26 May, Amazon announced that it would acquire the legendary Hollywood film studio Metro-Goldwyn-Mayer (MGM) for $8.45 billion. The purchase brings in a massive expansion of Amazon Prime’s streaming inventory: MGM has a library of thousands of popular movies and TV shows. The acquisition is the latest in a series of mergers and divestitures that are reshaping the entertainment industry as media and tech companies fight for supremacy in the streaming age and companies of all types experiment with content to create new business models.

The move highlights the increasing competition in the video-streaming landscape, with Amazon jockeying with Apple, Disney, Hulu and Netflix among others. The deal is the latest in the media industry that’s aimed at boosting streaming services to compete against the front runners. Last week, AT&T and Discovery announced they would combine media companies, creating a powerhouse that includes HGTV, CNN, Food Network and HBO.

Amazon, founded in 1995 as an online bookstore, has become a $1.6 trillion behemoth that is involved in a huge number of areas. The company operates a delivery network; a cloud computing business that powers the apps of companies including Netflix and McDonald’s; and has plans to send more than 3,200 satellites into space to beam Internet connections to Earth.

MGM, founded in 1924, is one of the oldest Hollywood studios. It has a chequered history and a long list of classics in its library, including Singin’ in the Rain, Ben Hur, the Wizard of Oz and the James Bond films. Its catalogue boasts more than 4,000 movies and 17,000 TV shows. More recent productions include reality TV staples Shark Tank and the Real Housewives of Beverly Hills, as well as the upcoming Bond movie No Time to Die.

Amazon’s purchase of MGM marks the latest salvo in the streaming wars. Although Amazon has its own studios, it has had mixed results with its offerings. The deal gives Amazon an extensive library of film and TV shows that it can use to offer its 200 million Prime Video subscribers and will also help in negotiating content licensing deals with other providers. The deal also lets it tap into MGM’s decades of experience in running a studio and making Hollywood movies.

It was important for Amazon to act now as the media world is consolidating at breakneck speed. To compete with the likes of Netflix and Disney+, companies have been buying up content, networks or studios as the best way to increase scale quickly.

The MGM deal comes at a time when Amazon is facing ongoing probes by multiple US federal agencies, state attorneys general and Europe’s antitrust watchdog. The US House Judiciary Committee’s Antitrust Subcommittee issued a sweeping report in October 2020 that found Amazon had monopoly power over third-party sellers on its Marketplace, although Amazon denies this.

Amazon noted that the deal is subject to regulatory approvals. Although the company has attracted antitrust concerns, it is unlikely US regulators will block the deal, as there’s a broad array of TV and movie production companies and streaming services. But the acquisition will certainly be deeply scrutinized and widely criticized given Amazon’s massive reach.

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