Barnes and Sperling (2021) discuss the purchase of Metro-Goldwyn-Mayer by Amazon. According to the authors, the deal was valued at $8.45 billion, the second-largest purchase after the Whole Foods acquisition of $13.7 billion in 2017. Previously, such well-known companies as Apple and Comcast fought to purchase a large film studio; however, Amazon offered 40% more.
Barnes and Sperling (2021) note that 200 million people pay for a Prime membership, which gets free shipping and other perks, including access to the Prime Video streaming service for $119 a year or $13 a month. It is noted that now Amazon will be able to significantly increase the range of films for its users of Amazon Prime. Thus, Amazon transferred the rights to more than 4 thousand films and more than 17 thousand TV shows. RoboCop, The Silence of the Lambs, Rocky, The Pink Panther, Basic Instinct, Legally Blonde, The Thomas Crown Affair, and series such as Vikings, The Handmaid’s Tale, Fargo, and The Real Housewives are among them. Moreover, films about the famous agent 007 can be separately noted. After the purchase of MGM, Amazon received 50% of the rights to this series of films.
The authors also note that while Amazon is an e-commerce company, it has significant ambitions in the film industry. Barnes and Sperling (2021) assert that the company has repeatedly spent substantial money to purchase films for Prime. Thus, Amazon paid $125 million for the rights to Coming to 2 America, $80 million for Borat Subsequent Moviefilm, and $200 million for The Tomorrow War.
However, the authors note that when it comes to making their hit movies, Amazon has long struggled. In this regard, the acquisition of MGM brings significant benefits to Amazon. First, Amazon got the rights to thousands of movies. Barnes and Sperling (2021) poetically describe Prime as a treasure trove of intellectual property. Secondly, this deal will help preserve the brilliant works of MGM. Thirdly, such an acquisition will help the company compete with Netflix and Disney. Fourth, there is unimaginable advertising potential for Amazon.
Reference
Barnes, B., & Sperling, N. (2021). James Bond, meet Jeff Bezos: Amazon makes $8.45 billion deal for MGM. The New York Times. Web.