With its $8.45 billion acquisition of MGM Studios, Amazon just took a big step in its so-far stalled efforts to become a content company.
The deal, revealed Wednesday, will need to pass regulatory muster, but analysts have not signaled that there are major red flags in the offing.
And so the acquisition gives Amazon a storied Hollywood studio, though one that has endured years of decline, and an instant library of film and TV content including James Bond and “Rocky” movies and hit TV shows including “The Voice,” “The Handmaid’s Tale” and “Fargo” and unscripted franchises including “Survivor,” “The Real Housewives,” “Live PD” and “The Apprentice.” (The Bond franchise is produced by Eon Productions, while MGM finances and distributes the films.)
“The real financial value behind this deal is the treasure trove of IP in the deep catalogue that we plan to reimagine and develop together with MGM’s talented team,” Mike Hopkins, Amazon’s senior vice president of Prime Video and Amazon Studios, said in a statement announcing the deal. “It’s very exciting and provides so many opportunities for high-quality storytelling.”
The instant library and a surfeit of content (including some 4,000 film titles) that can be rebooted and reimagined, and critically, will keep users paying their Prime membership, so that Amazon can compete with Disney+ (which has surpassed 100 million subscribers less than two years after launch) and Netflix (more than 207 million worldwide).
It’s hard to know how many of Amazon’s more than 200 million paying subscribers are there for the content — or the free shipping. But the company revealed last month that more than 175 million Prime subscribers have streamed content in the past year.
So far, Amazon’s foray into original content has been uneven. The company’s aggressive incursion into series content has produced a few hits, including “Fleabag” and “Transparent,” and the most expensive TV series ever made. The upcoming Lord of the Rings series is budgeted at $465 million for its first season. And Amazon has been a leader among its digital native competitors in acquiring sports rights, as evidenced by its exclusive deal for the NFL’s “Thursday Night Football’ games and a deal with YES network to stream New York Yankees baseball this season. But its movie strategy — which has included acquisitions and in-house titles — has foundered with flops like Mindy Kaling and Emma Thompson’s “Late Night” and Adam Driver’s “The Report.” And a strategy of paying other studios for film titles — like the $125 million it paid Paramount for “Coming 2 America” — is not sustainable.
Having a full-fledged studio operation in the tent should certainly up Amazon’s film output. But it remains to be seen how Amazon will evolve MGM Studio’s theatrical release strategy.
Of course, the other big unanswered question is what Amazon founder Jeff Bezos might do with hundreds of hours of raw footage of Donald Trump.