From everything Jeff Bezos ever said, one quote can best summarize how, exactly, Amazon will affect Hollywood: “When we win the Golden Globe, it helps us sell more shoes.” He said that back in 2016, at the Vox Code conference, but the thing remains true. Unlike Netflix, streaming is not the core business of Amazon. Prestige TV and movies are just another offer that will allow customers to renew their Premier membership, which in turn leads them to buy more items through Amazon. It’s a very old business strategy: Always give them back for more.
Maybe then it’s no wonder that Amazon is acquisition of MGM. It is an inherited Hollywood studio with about 17,000 TV shows and 4,000 movies – including RoboCop and James Bond movies – at his box office. Agreement, announced in May, has not yet been closed, and has already received oversight from the Federal Trade Commission. But if it passes, it will give Amazon access to all that content, as well as the studio infrastructure to do more, which the company can share and monetize however it wants. And this seems like a less favorable comeback, like Comcast acquiring NBCUniversal or Time Warner merging with AOL (remember that?). Or more recently, the ill-fated acquisition of Time Warner, most of which eventually split from AT&T Warner Bros. Discovery. But Amazon is no telecom and is building a lot expanding portfolio than almost any other company before it. “I think they did what AT&T did,” says Sarah Henschel, a streaming analyst for Omdi, “just better and wider.”
Buying MGM, more than anything, could give Amazon the biggest advantage in streaming wars. Analysts to anticipate streaming services will not record the same growth of subscribers in 2021 who recorded in the midst of last year’s peak Covid-19 locks, so for now the name of the game is retention. Netflix has north of 200 million subscribers; Disney +, about 100 million. Amazon receivables that more than 175 million of its 200 million Prime members have streamed something from its video service in the past year, but it’s hard to say whether those users would have subscribed to Prime Video as a standalone service. Streaming covers 26 percent of all TV time in the United States, according to analytical company Nielsen; Netflix alone occupies 6 percent, three times more than Amazon Prime. But in the end, that gap may not be important, because the content is just a bonus for people who want two-day delivery. Amazon can constantly pump all the money it earns from shoes into Amazon Studios and acquisitions like MGM keep coming forward. Like Apple, which is a hardware business that happens to have a streaming service, its core business (s) raises its creative. This is very important, especially right now when new streamers like Paramount + and Peacock are emerging, looking for money and eyeballs from viewers.
“We are now in a new era of TV and video consumption,” says Eric Schmitt, an analyst at Gartner. “Eighty years ago, 75 years ago, we had NBC, CBS and ABC. Now we have Netflix, YouTube and … Amazon? It’s for robbery, and why not make a show for it? ”
For Amazon, much of that show is MGM’s contract. Netflix has spent billions of dollars to fill its war chest with original movies and TV. HBO Max gets its massive catalog thanks to parent company WarnerMedia, Warner Bros., HBO, Adult Swim and many other established content machines. Disney + is the same; so is Hulu. Amazon Studios put out a few good things – Bezos wasn’t kidding with the Golden Globes – but the service never had a big offer. Instead building one, Amazon came out and bought it, similar to how it came in live sport earlier this year – something offered by several rivals.