Amazon acquires MGM; What does this mean?

Yesterday, Amazon finalized the acquisition of MGM, a move meant to strengthen the Amazon Prime Video streaming catalog. The move, which surprised people when it was first announced last May, cost Amazon $8.5 billion dollars. The upside is that it gives the company a lot of classic movies, which will help it compete against services like Disney+ and HBO Max, the latter of which is merging with Discovery+ to strengthen its own offering.

MGM, once a powerhouse in cinema, has fallen on hard times. While it’s well known for film series such as Rocky and James Bond, it also produced hits such as Legally Blonde and Doctor Zhivago. Unfortunately, the number of recent big hits have been far and few between. The movie Fighting With My Family is currently ranked as the 78th highest grossing film for the studio (and as an aside, would be a Fezmid Flight Recommendation!), and made only $41 million dollars. Compare that to a studio like Universal where the 100th ranking film of all time, Knocked Up, raked in an amazing $219 million dollars and would be 9th on MGMs list, right ahead of Creed II.

The Future of Amazon

So what does this all mean for you? The short answer is simple: If you have Amazon Prime, you’ll soon be able to stream MGM content through Prime Video. This extra content won’t cost anything, although Amazon did recently increase the price of Prime. The longer answer is much more complicated.

Amazon has a hard time competing in the streaming world. Although you can pay to rent a lot of movies, it doesn’t have a lot of exclusives. Amazon has been trying to fix that by creating originals like Upload, the Wheel of Time series, and the upcoming Lord of the Rings series, but it still lags far behind its competitors. While services like Disney+ and Netflix have access to bigger libraries, Amazon has always made its value proposition around the fact that you get lots of benefits with a Prime membership. With the MGM acquisition now finalized, Amazon has added a big name studio to its list of exclusives, giving Prime members more benefits.

Spending over $8 billion dollars on a movie studio shows that the company knows it needs to stay relevant in the streaming wars, but also that it is more interested in the long term. It’ll take awhile to earn back the money from streaming charges alone, but that’s not important. Since streaming isn’t the primary business of the company, it can subsidize the cost from its store and AWS.

Overall, this is a win for Amazon customers.