With its MGM acquisition, Amazon doesn't want to compete with streamers like Netflix but reduce Prime subscriber churn by providing enough blockbuster content

Amazon isn't competing with Netflix, but it is spending billions trying to figure out Hollywood. Maybe 007 can help.

Vox 2021-05-27 Peter Kafka

Context & Ripple Effects

Amazon's $8.45 billion MGM purchase follows years in which Amazon and Apple were reported to be pursuing rights to the James Bond franchise. The deal gives Amazon a studio asset as it treats Prime Video as a way to support the broader Prime membership rather than as a standalone Netflix challenger.

The subsequent coverage of MGM's place in Amazon's streaming plans makes the immediate question less about closing the transaction than about how Amazon deploys MGM's Hollywood franchises inside Prime.

First-order effects

Amazon gains MGM and its blockbuster content, adding programming it can use to make Prime membership more valuable and reduce subscriber churn.
MGM's future is redirected toward Amazon's Prime strategy, with the studio's franchises becoming part of a larger membership bundle rather than solely a Hollywood business.

Second-order effects

Netflix is not Amazon's stated target, but other streaming services must compete for attention against a Prime offering whose video catalog is supported by Amazon's broader subscription relationship.
Amazon's ownership changes the bargaining dynamic for marquee MGM properties: it no longer needs to pursue rights as an outside buyer, as it did in the earlier competition for Bond rights.

Third-order effects

The deal points to streaming becoming a retention feature inside broader consumer bundles, where the strategic value of a studio is measured by membership durability as well as viewing performance.
If large platforms continue to buy or control premium franchises, Hollywood's leverage shifts toward fewer distribution owners with direct subscriber relationships.

The trend: Streaming video is increasingly being used as a bundle-retention tool, encouraging platform owners to secure durable franchise libraries rather than compete only on standalone subscriptions.

Discussion

@migueldeicaza @migueldeicaza on x
@djb_rh You are right. Additionally, Apple probably walked out thinking “Nobody is going to give you what you are asking for, once you embrace a more humble number, come back to us” - and I bet right now, a bunch of corporate development people in Cupertino are updating their Lin…
@patrickvons @patrickvons on x
This is the best analysis I have read about why Amazon is buying MGM, which is NOT to primarily compete with Netflix. But will this deal mean the end of speculation about Amazon also buying a cinema chain or will that be seen as vertical integration? https://www.vox.com/...
@eastdakota @eastdakota on x
Easy to underestimate Amazon. It's a mistake. They're not cute or cuddly. They aim to destroy every one of their customers' businesses. https://twitter.com/...
@migueldeicaza @migueldeicaza on x
Apple is going to regret this. Only a handful of assets left, and will go up in price. https://twitter.com/...
@neilcybart Neil Cybart on x
Amazon confirms it will buy MGM for $8.45B. The deal is all about MGM's back catalog of video content and IP. Yesterday's Above Avalon daily update went over Amazon & MGM, as well as Apple vs. MGM. https://www.aboveavalon.com/ ... ($) https://twitter.com/...
@ballmatthew Matthew Ball on x
@DylanByers @ShiraOvide Why would Amazon not want to lead in an enormous TAM, that matters enormously to everyone, and where they can successfully compete (as it has)? That's where the burden of doubt should be And most of above came at Apple's expense
@jeffnolan Jeff Nolan on x
uh huh... yeah. I'm sure they spent $8.5b just to reduce churn. https://twitter.com/...
@blocktimusprime @blocktimusprime on x
Lol how do you sell a whole movie studio for the price of one Avengers movie? Pathetic https://twitter.com/...
@pkafka Peter Kafka on x
Why Amazon is paying $9 billion for MGM and James Bond https://www.vox.com/... Thing I didn't get into in this story: One reason Amazon is buying now, after looking earlier, is that MGM has cleaned itself up, and isn't weighed down by long-term deals to other distributors.
@bradstone Brad Stone on x
For the gentle folks at MGM, here are Jeff Bezos's twelve ingredients for every epic story, from the Hollywood chapter of my book Amazon Unbound. https://www.amazon.com/.... Good luck! https://twitter.com/...
@davidcicilline David Cicilline on x
Another day. Another mega merger. Amazon's proposed purchase of MGM reinforces what we already know — they are laser-focused on expanding and entrenching their monopoly power. That's bad for workers, consumers, and small businesses.
@hawleymo Josh Hawley on x
This sale should not go through. @amazon is already a monopoly platform that owns e-commerce, shipping, groceries & the cloud. They shouldn't be permitted to buy anything else. Period. https://twitter.com/...
@harrymccracken Harry McCracken on x
Bad news for Amazon: MGM's Leo the Lion has been known to go on strike. https://twitter.com/...
@zephyrteachout Zephyr Teachout on x
Amazon should be broken apart from the warehouses this MGM nonsense is exactly the wrong direction. Stop the monopoly madness.
@tha_rami Rami Ismail on x
“A hero with superpowers fights a compelling enemy like an alien invasion around the world with violence, making moral choices. sometimes it's happy and sometimes it's sad and sometimes it's funny. also there's betrayal and cliffhangers.” - Jeff Bezos on good storytelling https:/…
@mattyglesias Matthew Yglesias on x
I'm just a Bezos simp I know, but of all the “big tech monopolies” Amazon is the least monopoly-like and has the low margins to prove it.
@sarafischer Sara Fischer on x
Amazon announcing its 2nd-largest acquisition the day after being sued by DC AG for anti trust is a story itself —It's also happening shortly after WaPo announced a new editor, selected in part by Bezos —Amazing to think about Bezos navigating all of these interests at same time …
@senblumenthal Richard Blumenthal on x
A thread: Amazon's purchase of MGM Studios is a prime example of how Big Tech has gotten so big, how our antitrust policies are woefully out-of-date, & how the right leadership can repair the damage. 1/4 https://twitter.com/...
@mattmcgee Matt McGee on x
E-commerce company buys content company. https://twitter.com/...
@profgalloway Scott Galloway on x
26yo online retailer buys century-old entertainment icon in order to sell paper towels
@ryansgameshow @ryansgameshow on x
Let me get this straight. Netflix pays like $12-17 billion a year for new original content. Amazon just paid $8 billion for literally 100 years worth of old content. Seems like Bezos got a good deal! https://www.cnbc.com/...
@zaptf2 Zapty on x
Just to spite Jeff Bezos im gonna write an epic story that has 0 of these things https://twitter.com/...
@mrbrianfirenzi Brian Firenzi on x
This is like when you read a letterboxd review of your movie that says “it needed better scripting in the third act, cinematography wasn't epic like fincher or villeneuve” only now imagine this loser 19-year-old has $5 trillion liquid https://twitter.com/...
@snazzyq Quinn Nelson on x
This is terrible news. https://twitter.com/...
@zlurie Zander Lurie on x
Super annoyed that @amazon keeps topping our M&A bids. Would've been super fun for @SurveyMonkey to own the Bond series.
@dannysullivan Danny Sullivan on x
The name's Prime. James Prime. https://twitter.com/...
@a_webster Andrew Webster on x
legally blonde 3: alive girl, coming exclusively to amazon prime video
@backlon Dieter Bohn on x
Well I guess Q branch devices are going to helpfully suggest James Bond buy knock off Amazon clone devices now. So long Aston Martin DB5, hello Echo lapel pin. https://t.co/OZ8ULaBIsI
@toddbishop @toddbishop on x
Jeff Bezos on MGM deal at $AMZN annual meeting: “MGM has a vast deep catalog of much beloved intellectual property, and with the talented people at MGM and Amazon Studios, we can reimagine and develop that IP for the 21st century.”
@shiraovide Shira Ovide on x
I definitely highlighted this part of Amazon Unbound: https://twitter.com/...
@levie Aaron Levie on x
Amazon buying MGM is another milestone for tech and the rest of the world converging. The distinction between tech and non-tech is evaporating, and we're only going to see more of this in all industries.
@levynews Ari Levy on x
Amazon is the world's largest e-retailer and cloud computing company whose two biggest acquisitions are of a supermarket chain and movie studio.
@caseynewton Casey Newton on x
Upcoming Bond girl names: - Echo Dot - Kindle Page - Bessamer Mailbox
@repkenbuck Rep. Ken Buck on x
I'm deeply concerned by Amazon's acquisition of MGM Studios. Amazon's revenue for the first quarter of 2021 increased by 44% to $108.5 billion — the company's fastest growth in almost 10 years. https://www.cnbc.com/...
@quinnypig Corey Quinn on x
Add in “frugality” and “customer obsession” and these become the Amazon Leadership Principles. I for one am eager to replace “Disagree and Commit” with “Violence.” https://twitter.com/...
@ourand_sbj John Ourand on x
Amazon's Spring Purchases MGM: $8.5 billion 10 years of Thursday Night Football: $12 billion https://twitter.com/...
@shiraovide Shira Ovide on x
Wait, the MGM roaring lion is actually a *tiger*? I feel duped. https://www.nytimes.com/... https://twitter.com/...
@richardlai Richard Lai on x
Someday, James Bond will ride Blue Origin on a space mission. https://twitter.com/...
@sonnybunch Sonny Bunch on x
The good news about the Amazon acquisition of MGM is that we might finally—finally— get that ROBOCOP VS LEGALLY BLONDE series we've all been waiting for. https://www.axios.com/...
@digitalshields Mike Shields on x
No Time to Die. Or to Pee.
@lanceulanoff Lance Ulanoff on x
Just realized that by the time the next Bond film hits theaters, it could be “An Amazon Studios Film” https://twitter.com/...
@dorseyshaw Dorsey Shaw on x
Meanwhile.. the Senate is preparing a $10 billion bailout fund for Jeff Bezos's vanity spaceflight company Blue Origin.. https://twitter.com/... https://twitter.com/...
@brianstelter Brian Stelter on x
Amazon exec Mike Hopkins: “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.” He cites “so many opportunities for high-quality storytelling.” https://www.cnn.com/...
@kcoxdc Kate Cox on x
I, too, love to announce major acquisitions that will trigger antitrust scrutiny the day after I've been sued for antitrust violations. https://www.protocol.com/...
@markdistef Mark Di Stefano on x
“It is the first time a major tech company has bought a Hollywood studio, signaling starkly how the push into video streaming is shaking up the Hollywood landscape. The Information broke news of the talks last week.” https://www.theinformation.com/ ...
@loudmouthjulia Julia Alexander on x
Amazon bought MGM for nearly $9 billion. What does that mean for MGM (and James Bond), what does it mean for Amazon, and what does it mean right now, with Amazon at the center of antitrust concerns? https://www.ign.com/...
@geronimo_73 Roberto Serrano on x
Amazon and MGM have signed an agreement for Amazon to MGM for a purchase price of $8.45 billion Catalog includes over 4,000 beloved film titles and 17,000 TV shows, including thousands of fan favorites like The Handmaid's Tale, Fargo, and Vikings > https://press.aboutamazon.com/ …
@erikdavis Erik Davis on x
It's all about that IP... “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.” https://twitter.com/...
@jeremyhobson Jeremy Hobson on x
I was just thinking that Amazon should definitely get bigger and more powerful than it already is. https://twitter.com/...
@andybeard Andy Beard on x
James Bond's new gadgets will be a Kindle and Echo, MI6 will have a Ring doorbell https://www.techmeme.com/... via @rustybrick
@jonerlichman Jon Erlichman on x
Amazon's biggest acquisitions: 1) Whole Foods: $13.7 billion 2) MGM Studios: $8.45 billion 3) Zappos: $1.2 billion 4) Zoox: $1.2 billion 5) PillPack: $1 billion 6) Ring: $1 billion 7) Twitch: $970 million 8) Kiva Systems: $775 million 9) Quidsi: $545 million
@rustybrick Barry Schwartz on x
Amazon Prime Video just got better? https://twitter.com/...
@thedomino Dominic Chu on x
As if I needed any more reasons to pay for an Amazon Prime membership... https://www.cnbc.com/... $AMZN (via @annierpalmer @cnbc)

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