The timing of this purchase may not have been the best. Only a day earlier, Washington, DC’s attorney general filed an antitrust lawsuit against the company, charging it with “anticompetitive business practices” in the online retail market.
- On May 26, Amazon announced the purchase of Metro-Goldwyn-Mayer (MGM) for US$8.45 billion. This means that the company will add popular movie franchises like James Bond, Rocky and Indiana Jones to the Prime Video streaming service.
- MGM hands Amazon over 4,000 movies and 17,000 TV shows.
- The company hopes this move will boost Prime Video’s streaming numbers against an ever-growing list of competitors, including HBO Max, Paramount+ and Disney+ in addition to older rivals like Netflix and Hulu.
Who leads the streaming race and how is it measured?
- At the beginning of the streaming race, Netflix led the way, offering viewers movies and TV shows long before it had any serious competition. Netflix released its first original series, “House of Cards,” in February 2013. “House of Cards” was so popular that Netflix created other hits like “Stranger Things” and “Bridgerton.”
- “Bridgerton” recently became Netflix’s most viewed show ever, with a reported 82 million viewers.
- Netflix now leads the pack with 200 million subscribers. Disney+ has 95 million subscribers thanks to the classic animated movies in its catalog and its purchase of the rights to the Lucasfilm franchise, which includes the Star Wars movies, in 2012.
- Prime Video has not had the same success with original programming, having failed to score a major hit show, but the service still has 150 million global subscribers.
- But that number is really because the streaming service is included with Prime membership, which also provides free 2-day shipping on Amazon products, access to Amazon Music and more.
What led Amazon to buy MGM?
- Amazon continues to try to compete in various markets. In the last few years, the company has invested in cloud computing and even purchased the Whole Foods chain of grocery stores.
- This move might help to release some of the stress put on the streaming service because now, instead of having to feel it needs to risk its reputation, money and time on original series and movies, the company can just buy a studio and all the films that studio ever made.
- This is also potentially a response to AT&T’s US$43 billion deal with Discovery Inc, which combines HBO Max’s service with Discovery’s.
- This is Amazon’s second big stream-related purchase. The company had previously paid US$250 million for the rights to The Lord of the Rings films.
Are there any critics of this deal?
- The timing of this purchase may not have been the best. Only a day earlier, Washington, DC’s attorney general filed an antitrust lawsuit against Amazon. The suit charges the company with “anticompetitive business practices” in the online retail market.
- Politicians in Washington are concerned about Amazon’s increased power in the video-streaming industry, worrying that the company will have another monopoly, this time in the streaming industry.
- Democratic Senator Amy Klobuchar has called for a Justice Department investigation before the deal goes through, a move also backed by Republicans, including Colorado Representative Ken Buck.
- In response to the antitrust lawsuit, an Amazon spokesperson stated, “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”
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