Today, The Verge reported that Amazon has reached an agreement with the movie and TV company MGM and likely to buy it for $8.45 billion. Though this is a lot of money, for Amazon, it’s a big chance to enter this field. Once the purchase is realized, Amazon will own a library of content consisting of around 4,000 films and 17,000 hours of TV. Using MGM’s user database, it will attract even more big-spending Prime subscribers. Of course, its Prime Video service competes with Netflix and Disney Plus. But if the latter two do this as their main business, Amazon will use MGM for its own purposes.
Currently, Netflix and the likes are very popular. We mean many think that MGM is the past. MGM is mainly associated with the James Bond and Rocky franchises. But actually, it has been realized a lot of popular projects recently such as The Handmaid’s Tale and Vikings. As Amazon said, this deal will “provide customers with greater access” to MGM’s works and “empower” the studio to continue its “great storytelling.”
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“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,” Mike Hopkins, senior vice president of Prime Video and Amazon Studios, said in a statement. “It’s very exciting and provides so many opportunities for high-quality storytelling.”
Plan B Behind Amazon Prime Video
Though Amazon has been spending billions of dollars on making newer content yearly, Prime Video is a small part of its business. To somehow promote its media business, Amazon offered its Prime subscribers free Prime Video streaming. There are over 200 million Amazon Prime users and 175 million of them are using this feature for free.
However, it’s not a deal between two. Currently, there are a few private equity firms that own MGM. Among them, we can mention Anchorage Capital Group, Highland Capital Management, and Solus Alternative Asset Management.
At last, we should take this information with a pinch of salt. MGM has been up for sale since last December. Various media companies are trying to beef up their content libraries to compete with Netflix and Disney. Say, AT&T merged its media business WarnerMedia with Discovery. As a result, it has become the world’s second largest media firm by revenue outside of Disney. By the way, both have their own streaming services (HBO Max and Discovery Plus).