Tech

Amazon’s Hollywood Ambitions are very Old-School

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Out of everything Jeff Bezos never said, a quote can better summarize how, exactly, Amazon it will have an impact on Hollywood: “When we win a Golden Globe, it helps us sell more shoes.” He said this in 2016, at the Vox Code Conference, but the point remains true. On the contrary Netflix, streaming is not the core business of Amazon. TV and Prestige movies are just another offer to get customers to reconnect with their Prime members, which in turn makes them buy more things through Amazon. It’s a very old-school business strategy: Keep coming back for more.

Maybe it’s no surprise, then, that Amazon is acquiring MGM. It is a legacy Hollywood studio with about 17,000 TV series and 4,000 movies -including RoboCop and James Bond movies — in their drawers. The deal, announced in May, has yet to close, and has already received scrutiny from the Federal Trade Commission. But if it happens, it will give Amazon access to all that content, as well as a studio infrastructure to do more, which the company can then share and monetize as it wants. This too, feels like a less favorable return, like Comcast acquires NBCUniversal or Time Warner merges with AOL (remember?). Or the latest, unfortunate acquisition of AT&T’s Time Warner, most of which has gone to waste. Discover Warner Bros.. But Amazon isn’t telecom, and it builds a lot wider portfolio than almost any other society before. “I think they did what AT&T did,” says Sarah Henschel, streaming analyst for Omdia, “just better and broader.”

Acquiring MGM, most of all, could give Amazon the biggest advantage in the market streaming wars. Analysts provides streaming services will not see the same growth in subscribers in 2021 that they saw during last year’s high Covid-19 lockdowns, so for now the name of the game is retention. Netflix has north of 200 million subscribers; Disney +, about 100 million. Amazon claims that more than 175 million of its 200 million Prime members have streamed something from its video service in the last year, but it’s hard to say whether those users will subscribe to Prime Video as a standalone service. Streaming accounts for 26 percent of all TV time in the United States, according to Nielsen analytical company; Only Netflix occupies 6 percent, three times more than Amazon Prime. But in the end, that gap may not matter, since the content is just a bonus for people who want two-day shipments. Amazon can continue to pump all that money it earns from shoes into Amazon Studios and acquisitions like MGM and it always comes forward. Like Apple, which is a hardware company that just happens to have a streaming service, its core business (s) guard its creatives. This matters a lot, especially now that new streamers like Paramount + and Peacock are emerging, demanding money and viewership.

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“We are now in a new era of TV and video consumption,” says Eric Schmitt, a Gartner analyst. “Eighty years ago, 75 years ago, we had NBC, CBS and ABC. Now we have Netflix, YouTube, and … Amazon? It’s about to take over, and why not give it a play? “

For Amazon, a big part of that game is the MGM deal. Netflix has spent billions of dollars filling its original movie and TV war box. HBO Max receives its massive catalog thanks to parent company WarnerMedia, home of Warner Bros., HBO, Adult Swim, and dozens of other established content machines. Disney + is the same; so is Hulu. Amazon Studios has uncovered some good stuff – Bezos wasn’t kidding about the Golden Globes – but the service has never had a large trove of offers. Instead of building one, Amazon went and bought it, similar to how it went camp sports earlier this year — something few of its rivals offer.


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