Pixel Envy

Written by Nick Heer.

Amazon Is Buying MGM for Over $8 Billion

Peter Kafka, Recode:

Big tech companies have been eyeing big media companies for years — but they’ve never gotten together before. Now it’s finally, probably happening: Amazon is getting ready to pay $9 billion for MGM Holdings, the Hollywood studio that brings you James Bond and a smattering of other stuff, like the Pink Panther movies and The Handmaid’s Tale TV show.

Which leads to some questions. Why now? Why Amazon? Why MGM? And, just as important: Will regulators let it happen?

Short answers here: The media world is consolidating and there aren’t many targets left for a would-be acquirer. Amazon has spent many billions on video without much to show for it, and thinks owning a studio — and, crucially, the rights to the intellectual property the studio owns — could help it create Really Big Movies and TV Shows You Really Want To Watch. Not so much because it wants to own streaming, but because it wants you to keep coming to Amazon. MGM, meanwhile, has been trying to sell itself for years.

That last sentence seems key. MGM Studios has been shuffled around for pretty much its entire existence, and has been on shaky financial ground for decades. Its strongest asset is the entire catalogue of James Bond movies; it also controls the Rocky, Legally Blonde, and Pink Panther franchises. Not a whole lot going on there.

The question is what Amazon is going to make of its $8.45 billion purchase — Kafka’s analysis was written before the final purchase price was confirmed — assuming regulators permit it. Does it provide the catalyst for Amazon’s streaming platform to emerge from the shadows of being a Prime perk? Or is this more of a long-tail marketing push to get you to buy a Prime subscription and, ultimately, purchase loads of pillows and bar carts and musical instruments and cases of snacks you don’t need? It looks like James Bond films are not just for product placement any more; they are now long-form advertisements for the world’s largest counterfeiters’ paradise.