Amazon announced a deal to acquire MGM studios for $8.5 billion today. The deal will provide Amazon a deep library of high value content and a studio and production house to create more, as it looks to compete in the highly competitive direct-to-consumer streaming TV marketplace.
“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,” said Mike Hopkins, Senior Vice President of Prime Video and Amazon Studios in a press release. “It’s very exciting and provides so many opportunities for high-quality storytelling.”
In addition to blue chip movie titles and franchises like James Bond and Rocky, MGM also has 17K TV shows and 4K movies in its library.
The streaming wars are reshaping the TV and content industry, causing the largest players to explore how to get even larger. The other recent example is the tie-up between WarnerMedia and Discovery, announced just last week. More deals are expected.
All are chasing Netflix and its 200+ million global subscriber base. Amazon is its closest rival in terms of subscribers with its Prime Video streaming service, which comes with Amazon’s Prime subscription service. Amazon says it also has 200 million Prime subscribers globally, although how many actually use Prime Video has not been disclosed.
The streaming business is not for the faint at heart. It requires an annual investment of several billion dollars or more just for content. That’s one reason why AT&T shed WarnerMedia. Amazon just dropped $8.5 billion to get a leg up.
Amazon is one of the few companies in the world where that size investment is hardly worrying, considering that the company generated $386 billion in revenue during 2020. As ACA Connects Vice President of Communications Ted Hearn likes to point out, the total value of the Amazon MGM deal equates to about 8 days of revenue for Amazon.
Amazon also just splurged on NFL games, committing over $12 billion for the rights to stream the Thursday night NFL package for the next ten years.