Amazon purchases MGM for over $8 billion, boosting Prime library
posted Saturday May 29, 2021 by Scott Ertz
Over the past few years, we have seen companies branch outside of their core competencies. It seems like everyone in the tech industry, whether it be retail sales or telecommunications, wants to be in the content game. AT&T purchased Time Warner, forming WarnerMedia. Verizon purchased AOL, as well as Yahoo. Now, Amazon has agreed to purchase MGM for $8.45 billion.
Where AT&T and Verizon have struggled, Amazon will likely succeed. Verizon purchased a pair of content producers, but their content was not popular or terribly valuable. In addition, Verizon did not have an infrastructure in place to take advantage of the new content they were purchasing. Amazon, on the other hand, has a strong infrastructure in place for video content. Prime Video and IMDb TV, there is plenty of opportunity for Amazon to take advantage of its new acquisition to improve its own offerings.
Purchasing big studios has become a popular way to improve a streaming catalog. Disney made a similar move with Twentieth Century Fox, bringing everything from The Simpsons to Home Alone into the fold. While Amazon did pick up full access to franchises like James Bond, there are some big gaps.
Similar to Disney's issues with the rights to Spiderman, MGM doesn't own the rights to its whole library, either. For example, The Wizard of Oz and Gone With The Wind are currently not under the management of MGM, but WarnerMedia. In fact, thanks to a strange sale orchestrated by Ted Turner in the 1986, WarnerMedia controls all of MGM's assets (around 2,000 titles) from before the sale. Interestingly, Turner did not retain control of the United Artists catalog, which MGM purchased in 1981.
While older content may not be part of the deal, Amazon is getting a ton of new content under its umbrella. Once streaming contracts expire, Amazon is likely to make all of the MGM content exclusive to Amazon platforms. It also gives Amazon a strong position in the theater business.
Another potential big change that this purchase will make is in the industry as a whole. With one of the streaming giants owning one of the generational movie giants, it's going to put a lot of pressure on the industry to recognize streaming platforms as legitimate. Currently, movies have to spend a certain amount of time in a certain number of theaters before they can be considered for awards. With MGM being part of Amazon, it will be significantly harder for the industry to pretend that streaming platforms are less than theaters. Combined with the reliance on streaming platforms over the past year, that requirement is going to be challenged and potentially overturned.
