Amazon boosts streaming ambitions with deal for MGM studios

Amazonhas agreed to buy the storied MGMstudiosfor $8.45 billion, the companies said Wednesday, giving the US tech giant a vast content library to further its ambitions in streaming.

The deal bolstersAmazonPrime Video, which competes with Netflix and others in the fast-evolving market, with some 4,000 films, including the James Bond franchise, and 17,000 television shows.

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"The real financial value behind this deal is the treasure trove of IP (intellectual property) in the deep catalog that we plan to reimagine and develop together with MGM's talented team," said Mike Hopkins, senior vice president of Prime Video andAmazonStudios.

The deal comes withAmazonexperiencing surging growth in online retail and cloud computing while making a push into entertainment as more consumers turn to streaming media.

It givesAmazonthe fabled Metro Goldwyn Mayerstudios, an iconic name in Hollywood that has been through a series of ownership changes and bankruptcy in recent years.

In addition to the James Bond franchise, MGM owns the rights to film productions including "Rocky", "Legally Blonde" and "Tomb Raider," and television shows such as "The Handmaid's Tale" and "Real Housewives Of Beverly Hills."

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"MGM has nearly a century of filmmaking history and complements the work ofAmazonStudios, which has primarily focused on producing TV show programming," a statement from the companies said.

"Amazonwill help preserve MGM's heritage and catalog of films, and provide customers with greater access to these existing works. Through this acquisition,Amazonwould empower MGM to continue to do what they do best: great storytelling."

Streaming gains steam

The tie-up marks a new twist in a fast-evolving media landscape increasingly dominated by streaming giants such as Netflix, a trend which has accelerated during the coronavirus pandemic.

In recent updates, Netflix said its subscriber base has grown to 208 million worldwide, while Disney has 159 million for its various streaming services.

Netflix is investing as much as $17 billion in content this year in an effort to stay ahead of rivals.

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The MGM deal "definitely helpsAmazonbecause consumers want more content," said Dan Rayburn, a media analyst with Frost & Sullivan.

Additionally,Amazonwill be acquiring a fabled Hollywood name with a reputation in the cinema business, Rayburn noted.

"MGM is all about making movies, and that’s not really whatAmazondoes," the analyst said. "So it gives them a company in the business of making movies."

Rayburn added thatAmazonmay also be able to use the deal to increase its "brand and messaging," with ads in movie theaters, and that this "helpsAmazonfurther their worldwide dominance of everything."

The deal could increase scrutiny forAmazon, one of the Big Tech firms gaining unprecedented economic power in recent years and in the crosshairs of antitrust enforcers around the world.

Amazonwas sued this week by US capital city Washington for allegedly abusing its dominance of online retail

Last week, telecom giant AT&T said it was spinning off its WarnerMedia division, owner of the Warner Brosstudios-- in a combination with Discovery, creating a new entity to focus on streaming and competing with the rapidly growing Disney+ and new entrants such as Apple TV+.

Amazonhas said its Prime Video is used by some 175 million people worldwide. Its "Manchester by the Sea" in 2017 became the first film from a streaming service to be nominated for the best picture Oscar.

MGMstudios, which is known for its roaring lion mascot but has struggled tomake recent box office hits, is not connected to the MGM Resorts groupthat owns hotels and casinos around the world.

ForAmazon, the deal is its second-largest acquisition after its purchase in 2017 of the Whole Foods grocery chain for $13.7 billion.