Amazon is buying iconic film studio and the company behind James Bond, MGM, in a deal worth $8.45 billion, the company announced today. The Information first reported the negotiations.
Amazon noted in its announcement that it will “preserve MGM’s heritage and catalog of films” with the acquisition.
MGM is the latest, smaller film company to be acquired by a much bigger company. The studio reportedly started looking for a buyer in December 2020, as first reported by Variety. Apple supposedly passed on acquiring the studio for around $6 billion last year, giving Amazon a clear runway to go full steam ahead.
One of the biggest questions people may have about the purchase is why Amazon would want to own MGM. Aside from the obvious value in sharing parts of the Bond franchise (with Eon Productions, which has control over how Bond movies are distributed meaning it’s not like Bond is going to premiere on Amazon Prime Video just yet), two of the biggest advantages are Epix and a deep catalog of films.
Epix is a cable channel that’s available to 85 million cable customers around the country. Amazon likely doesn’t care about that aspect. Cable is losing customers every single quarter, and Amazon, a company built on the back of Prime subscribers, isn’t suddenly trying to compete with companies like NBCUniversal or WarnerMedia. That’s especially true this week following news that WarnerMedia and Discovery are merging to create a new super company that will dominate the world of cable and, potentially, streaming.
What Epix does have, however, is a lucrative Pay-1 deal with companies like Paramount. Pay-1 is a fancy term that basically means Epix gets exclusive rights to a Paramount movie after it hits theaters. While part of the deal has changed (Epix and ViacomCBS signed a new deal in February that will allow some Paramount films to hit Paramount+ for a period of time before heading to Epix) it means that Amazon would get access to films like Mission Impossible 7 and A Quiet Place II.
These are the types of movies that, historically, convince people to sign up for a streaming service or prevent them from canceling. At Amazon, it’s a little different. Some people may sign up for Amazon Prime because of shows like Marvelous Mrs. Maisel, but it’s more likely that people sign up for Prime on the retail side. If, however, Prime Video keeps them actively engaged on the website, or does prevent someone from canceling, Amazon Prime’s churn rate decreases and the company’s main revenue point continues to grow.
Amazon wants to be a necessity for customers across the board. They want people to get all their groceries, electronics, and books from the website. Amazon Prime Video is arguably not a necessity — it just so happens to come with the bigger Prime offering. Having a library as deep as MGM’s could change that, though.
As Indiewire points out, MGM’s library “includes 4,000 films and 17,000 hours of television, including titles like ‘Silence of the Lambs’ and ‘Rocky.’” Amazon Prime Video has a decent library already, but the company is now competing with deep wells from competitors at NBCUniversal, Disney (which now includes Fox), ViacomCBS, and the aforementioned new offering from WarnerMedia and Discovery.
Bond may be MGM’s biggest franchise (even with confusing distribution rules), but there are enough recognizable titles in the company’s vault to keep subscribers happy and engaged, Amazon hopes. It all comes back to an ouroboros strategy. If people are more engaged with Prime Video, they may use the retail website to buy more household items. If they spend more time on Amazon’s main website, they could decide to read a comic on Comixology they saw an ad for in the corner of the website. They might go from there to Twitch, and then back to Prime Video. Amazon wants to keep as many people in the ecosystem as possible.
And, hey, $9 billion is a lot — but it’s still chump change for a company whose market value is $1.76 trillion.
So, for $9 billion, Amazon is going to own James Bond and you’ll notice a bunch of new movies available to stream exclusively (I imagine) on Prime Video. The only real question left is whether Jeff Bezos gets to play a Bond villain in the future.