And the Oscar Goes to: Amazon?
May 27, 2021
By Rich Nachmias
The entertainment industry was upended with the news that Amazon had purchased Metro-Goldwyn-Mayer Studios (“MGM”) for $8.45 billion. The deal gives Amazon ownership of MGM’s deep library of 4,000 film titles—a dozen of which won the Academy Award for Best Picture, and 177 have won the coveted Oscar. The MGM library holds fan favorites such as the Rocky and James Bond series and brings nearly 100 years of cinema history to the e-commerce giant. MGM made the strategic decision not to rush into this blockbuster sale as evidenced by the deal closing approximately 40% higher than others, such as Apple and Comcast, were willing to pay.
This deal comes shortly after recent news of Amazon Prime Video being named the new home of Thursday Night Football beginning in 2022. So why is Amazon buying up so much content? Yes, content is king, but there’s more to it than that. It started in the early days of the pandemic when Amazon purchased the rights to Coming 2 America for $125 million and Borat Subsequent Moviefilm for $80 million. Amazon clearly wants to be part of all angles of the conversation, and with nearly all of the population entrenched at home and relying more heavily on content, the purchase became a no-brainer. Perhaps it’s hoping to premiere Daniel Craig’s much-anticipated last turn as James Bond in No Time to Die? Or maybe Amazon is hoping to land on the Oscar stage this year with possible Academy Award contenders House of Gucci with Lady Gaga and Adam Driver, or Respect starring Jennifer Hudson and based on the Queen of Soul Aretha Franklin.
There’s one theory that Amazon was willing to pay more for MGM than others in order to retain MGM executives. However, Amazon is bringing back its former head of Prime Video, Amazon Studios and Amazon Music, Jeff Blackburn, to lead its global media and entertainment group. So it’s apparently not looking to any MGM executives to fill that specific role.
While Amazon has the means to try different industries, its deal strategy—similar to the Whole Foods purchase in 2017—is to keep Amazon Prime members engaged on all fronts. Amazon CEO Jeff Bezos has claimed that investments such as these bring in new Prime users who ultimately spend much more on the site than those who are not Prime subscribers. For Amazon, it seems the old adage of “investing in yourself is the best investment you can make” is its key to success.