Why Amazon is paying nearly $9 billion for MGM and James Bond: Amazon’s$8.45 billion deal has closed, and the company blazoned that MGM will be joining Prime Video and Amazon Studios.
Big tech companies have been eyeing big media companies for times — but they ’ve noway gotten together ahead. Now it’s eventually, presumably passing Amazon is getting ready to pay$ 9 billion for MGM Effects, the Hollywood plant that brings you James Bond and a sprinkling of other stuff, like the Pink Catamount pictures and The Handmaid’s Tale Television show.
Which leads to some questions. Why now? Amazon? MGM? And, just as important Will controllers let it be?
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Short answers then The media world is consolidating and there are n’t numerous targets left for a would- be acquirer. Amazon has spent numerous billions on videotape without important to show for it, and thinks retaining a plant — and, crucially, the rights to the intellectual property the plant owns — could help it produce Really Big Pictures and Television Shows You Really Want to Watch. Not so important because it wants to enjoy streaming, but because it wants you to keep coming to Amazon. MGM, meanwhile, has been trying to vend itself for times.
And the way controllers respond to this will be fascinating Amazon will claim that it’s too small in videotape for this to pose a competitive trouble. On the other hand, Amazon is formerly in controllers’cross-hairs. In proposition that’s for running a business and dealing its own particulars in the same business, but really just for being so. big. So this is akin to signaling a red flag in front of the likes ofSen. Amy Klobuchar and daring her to charge.
Now that we ’re done with the CliffsNotes, a little environment about Amazon and Hollywood, which remains one of the weirder media stories of the last decade
.Amazon has been making and buying its own Television shows and pictures since 2013 — the same time Netflix got into streaming its own stuff with House of Cards. But you presumably do n’t remember Amazon’s first shows — Alpha House? Betas? — and you presumably ca n’t suppose of numerous Amazon shows at each, except for Transparent and a many others. Which gives you a sense of how each over the place Amazon’s sweats to break into Hollywood have been, despite the fact that Jeff Bezos has spent a lot to make it be.
Jeff Bezos, TV guy: “Look. I know what it takes to make a great show. This should not be that hard.”@BradStone explains why Amazon failed at TV in his new book: https://t.co/Jus2c8Cdpe
— Peter Kafka (@pkafka) May 11, 2021
And talks about it with @DelRey here: https://t.co/DJOxsGnZ1H pic.twitter.com/6ocKLHgIBh
Bezos is still trying, though Amazon is sinking at least half a billion bones into a Lord of the Rings TV show, and$ 10 billion over 10 times to show an NFL game once a week. And now, presumably, another$ 9 billion for MGM.
So does that mean Amazon is eventually getting ready to take on the streaming heavyweights — Netflix, Disney, and perhaps WarnerMedia/ Discovery?
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Astonishingly, the answer is no The company is indeed more serious than ever about videotape. But it’s playing a different game than the “ real” pennants. Amazon does n’t want to contend with Netflix or the other biggies for watch time and subscriber bones. It just wants you to watch some videotape and spend some plutocrat.
That’s because all of Amazon’s “ decoration” videotape is whisked into its Amazon Prime subscription offer, which gives you free shipping and other delicacies. It’s Amazon’s most important armament. For times, Bezos has said that giving you stuff like Transparent made you that much more likely to stick around and order a brace of shoes — or at least keep paying for Prime.
What Amazon says less constantly but is also true is that it has erected a really nice business dealing subscriptions to other people’s videotape services — services like Discovery, for case. Amazon sells those subscriptions via its “ channels” immolation, and it keeps a big slice of the plutocrat you pay for those every month. In order to do that, it’s helpful to have stuff like Jack Ryan, the series starring John Krasinski as Tom Clancy’s critic/ action idol, to get people watching videotape on Amazon. Come for the free shows, also perhaps buy some other bones.
So Amazon does n’t want to dominate Hollywood. It just wants a handhold. But indeed that handhold has been hard to get, and Bezos has been adamant for a while that the way to get it is n’t via niche shows like Transparent presently — it’s by buying or making big blockbusters that lots of people will watch.
That explains The Lord of the Rings and the NFL, and that explains MGM It gives Amazon one giant movie brand everyone has heard of and still wants to watch — James Bond — and also a bunch of other stuff that could turn into commodity, perhaps, one day. MGM owns the rights to Rocky, for case, which has formerly turned into multiple pictures, but perhaps there’s a way to do a Rocky Extended Universe.
What the hell is a Rocky Extended Universe? No bone knows! But that’s been the conventional wisdom in Hollywood for the last many times. No bone knew you would want to watch pictures about the Guardians of the Galaxy, or a Television show about Wanda Maximoff and Vision. But now that Disney owns Marvel, it has been booby-trapping the company’s store of obscure superheroes and turning them into mammoth, popular specs. That’s the playbook.
And that playbook, by the way, requires retaining the stuff rather of renting it. It used to be that Disney and Comcast and all the other big media companies were fine letting pennants like Netflix and Amazon adopt their old Television shows and pictures, but those days are over. Meanwhile, chancing other workrooms that will make big pictures and Television shows for you is getting harder, too. Sony, for case, which used to make stuff for everyone, is now off the table because it has long- term deals with Netflix and Disney. Amazon demanded to buy. commodity.
So Amazon is laying billions — if the deal goes through, it’ll be the company’s alternate-biggest purchase, after it paid$ 13 billion for Whole Foods — on a Hollywood accession that might give it the capability to come kindly more competitive, in a side business, against people who contend veritably seriously in only that business. If controllers allow it.
Amazon’s argument to the Klobuchars of the world, by the way, will be straightforward They ’re a small player in entertainment, and the accession wo n’t reduce consumer choice.
On the other hand If you did n’t like the fact that Amazon runs a store that sells batteries and sells its own batteries in that same store, you might see analogous parallels to running a movie store and dealing your own pictures. Or, you might simply have a problem with one of the most important companies in the world using its billions to buy anything at all. We ’ll find out.
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