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Amazon's MGM Purchase Is as Huge as It Sounds

Amazon's MGM Purchase Is as Huge as It Sounds

Amazon's $9 Billion MGM Bet Is Huge

June 01, 2021

June 1, 2021

Well, things are certainly getting interesting in the cord-cutting market, aren't they? The buy-outs and mergers are continuing at a rapid pace. Amazon's purchase of MGM for over $8 billion is going to give it a huge advantage over its competitors and will likely continue to spur on major acquisitions. How long that's sustainable, however, is unclear, as the FTC is probably looking at all of these mergers with a bit of trepidation.

Streamer's Spotlight: Another Week, Another Acquisition

It's just as the title of this section says: another week, another acquisition. In case you missed the news, Amazon went big and dug deep in order to purchase MGM for a cool $8.45 billion dollars. For a company like Amazon, that's pretty much pocket change. After all, the company is worth over $300 billion (compared to $30 billion for Netflix).

The big questions, of course, are what Amazon subscribers are about to get as a part of this deal and what that means for Amazon's on-demand streaming subscription prices.

What Does MGM Own?

MGM's content library is absolutely huge. The company is nearly 100 years old, after all. Most of us grew up watching MGM movies with the lion logo roaring before a great film. And indeed, its film library has some stunningly great hits. The company owns

James Bond

, for starters. Imagine what Amazon could do with that IP alone?

Amazon's MGM purchase means it also gains ownership of

The Addams Family,

all of the

Hobbit

movies,

The Wizard of Oz

Tarzan

, the

Rocky Movies

, and so much more. Seriously, the list goes on since we're dealing with a major production company that's a century old.

The Downside: Amazon Won't Give This To Us for Nothing

Amazon might have deep pockets, but $8 billion dollars is a lot of money, even for a market giant. Don't expect the company to add that much content to its library without looking for something in return from its customer base. Chances are high that this acquisition is going to be followed fairly quickly by some price increases for its on-demand streaming service, Prime Video. And since Amazon rolls Prime Video into its Amazon Prime account for US subscribers, we can probably expect to see a price increase for all Prime customers.

How Will Competitors Respond?

Great question. Amazon's biggest competitors are going to have to respond. There's no getting around something like this. Netflix has gone all-in on producing original content, but that might not be sustainable when all of its competitors own the content it wants to license. If Netflix starts losing too much of its pillar licensed content, its growth will be stymied. Ultimately, it's probably going to have to start looking for content companies to buy. The question, then, what is even left to buy?