As the streaming war continues, Amazon made the latest move in the ongoing battle by acquiring Metro Goldwyn Mayer for $8.45 billion with an equity value of $6.5 billion. Amazon purchased the 97-year-old film and television giant for 40 percent more than other potential buyers believed MGM was worth. Many of the popular MGM productions were sold years ago, but the acquisition does come with a Hollywood treasure trove: the James Bond Series. MGM has a broad library of thousands of movies, TV shows, and notable franchises such as “Rocky”, “RoboCop”, “The Silence of the Lambs”, “The Pink Panther”, and much more. As Disney+, HBO Max, Apple TV+, and Paramount+ continue to utilize television productions, Amazon is going with a slightly different strategy by focusing more on movies to keep growing in the U.S. as well as abroad.
Many are wondering why Amazon would pay such a massive premium for MGM and its productions, but it simply comes down to the fact that the company can. Amazon has the fourth largest market capitalization of $1.64 trillion along with $71 billion in cash. Along with the purchase of Whole Foods for $13.4 billion in 2017, MGM is the second largest acquisition for the company. The purchase is also acting as a strategic move to entertain its current 200 million Prime members as well as attract new customers with the nostalgic and old-line productions of MGM. Amazon has struggled with producing movies as the company is tied up in the productions of their television series and MGM will be able to help. Other well-known and established studios are becoming less willing to license their productions to streaming services making the films as well as the studios more valuable.
The completion of the deal does come under regulatory approval and could take years as many government officials are “deeply concerned” by the acquisition from the monopoly company. This announcement also comes one day after an antitrust lawsuit from D.C. Attorney General Karl Racine. Though this can be a concern, Amazon is continuing with their strategy of utilizing their vast amount of capital to become a tough competitor in the ongoing streaming war.