As the overpopulated streaming video landscape continues to expand, Amazon is vying to keep its top-tier ranking by buying MGM for $8.45 billion. While MGM’s library isn’t worth the premium price Amazon is paying, the talent behind the screen is the real deal.
The main reason for this acquisition is simple: to enable Amazon to deliver a more consistent stream of original content that streaming viewers crave, prevent defection among the 43% of online consumers who view Prime Video monthly, and ensuring Amazon’s hold on the high value of Prime members.
Of the more than 4,000 films and 17,000 TV shows in the MGM library, only a handful have top-tier value: “Legally Blonde,” “The Handmaid’s Tale,” The Real Housewives franchise, and the James Bond series. With other services offering more compelling content to lure consumers, Amazon needs to boost its content creation to prevent defections.
Enter MGM film chief Michael De Luca, reality producer Mark Burnett, and MGM board chair Kevin Ulrich: experienced entertainment pros who provide a strong foundation to create and produce notable, original programming titles.
A bonus for the deal is its potential to strengthen Amazon’s plans to expand Prime internationally. Amazon announced the return of Jeff Blackburn, formerly a top lieutenant to Bezos, to spearhead a new Global Media & Entertainment division. The Bond franchise’s global popularity gives Blackburn a catalyst for Amazon’s international plans (hat tip to Sucharita Kodali for her insight into how the Bond franchise fits into Amazon Prime’s international ambitions).
Amazon needs one more element for this acquisition to succeed: a war chest to allow these executives to acquire new titles and produce a steady stream of content. Earlier this year, Amazon paid the NFL $1 billion per year for the rights to “Thursday Night Football,” signaling a new direction for its content ambitions. Amazon will need to write a much larger check if the MGM purchase is another signal of ambitions to become a major media player.