What's going on?
He is CEO, hear him roar: Amazon agreed on Wednesday to buy iconic movie studio Metro-Goldwyn-Mayer (MGM) for $8.5 billion.
What does this mean?
The spread of streaming service is putting pressure on Amazon to do more with Prime Video – a key draw for the company’s 200 million-plus paying members. And MGM – the film and TV production and distribution powerhouse behind James Bond and The Handmaid’s Tale – will give Amazon instant access to a wealth of classic (and rebootable) content for less than the $11 billion it spent on shows and movies in 2020.
Still, it’s not only the biggest deal the company’s done since its near $14 billion takeover of Whole Foods back in 2017: it’s one that Amazon seems to think is strategically significant enough to reportedly pay around $3 billion more than both Apple and Comcast were offering (tweet this).
Why should I care?
For markets: Fortune favors the Disney+ game plan.
Amazon’s investors will hope MGM breathes fresh life into its streaming service, helping the company hold on to existing customers and attract new ones. And the signs are encouraging: it seems to be following in the footsteps of Disney+, whose blockbuster back catalog is one of the main reasons for its success. That’s leaving Netflix – which has taken the contrasting approach of creating original content over acquiring the rights to existing media libraries – looking increasingly isolated.
The bigger picture: No time to buy?
Regulators on both sides of the Atlantic are also likely to be less than thrilled by Amazon’s antics. They’re already worried about the company’s anticompetitive dominance in several markets, with numerous probes ongoing. The latest – launched just this week – has seen Amazon taken to task for allegedly preventing third-party ecommerce sellers from offering their products for cheaper elsewhere, keeping prices unfairly high for consumers.