Because Amazon pays $ 9 billion for MGM and James Bond

Big tech companies have been looking at big media companies for years – but they’ve never met before. Now it’s finally, probably happening: Amazon is preparing to pay $ 9 billion for MGM Holdings, the Hollywood studio that brings you James Bond and a handful of other things, like the Pink Panther movies and The servant’s account TV show.

Which leads to some questions. Why now? Why Amazon? Why MGM? And, just as importantly: Will regulators let that happen?

Short answers here: The media world is consolidating and they do not remain so many goals for a future buyer. Amazon has spent billions on videos without much to show for it, and thinks owning a studio – and, crucially, the intellectual property rights that the studio owns – could help create Really Great Movies and TV Shows that you really want to watch. . Not so much because he wants to own a streaming, but because he wants to keep coming to Amazon. Meanwhile, MGM has been trying to sell itself for years and years.

And the way regulators respond to this will be fascinating: Amazon will say it’s too small in video for this to pose a competitive threat. On the other hand, Amazon is already in the hairs of regulators. In theory it’s to manage a market and sell their items in the same market, but really just to be so … great. So it’s like waving a red flag in front of everyone’s tastes Senator Amy Klobuchar and daring to charge.

Now that we’re done with CliffsNotes, a little story about Amazon and Hollywood that remains one of the weirdest media stories of the last decade:

Amazon has been making and buying its own TV shows and movies since 2013 – the same year Netflix streamed its stuff House of Cards. But you may not remember the first Amazon shows – Alpha House? Beta? – and you probably can’t think of many Amazon shows at all, except for Transparent and a few others. Which gives you a sense of how Amazon’s efforts to thrive in Hollywood have been all over the place, despite the fact that Jeff Bezos has spent a lot to achieve it.

Still, Bezos still proves it: Amazon puts at least half a billion dollars into it Lord of the Rings Make TV, and $ 10 billion over 10 years to show an NFL game once a week. And now, probably, another $ 9 billion for MGM.

So it means that Amazon is finally getting ready to face the heavyweights in streaming – Netflix, Disney, and maybe WarnerMedia / Discovery?

Surprisingly, the answer is no: The company is actually more serious than ever when it comes to video. But it plays a different game than the “real” streamers. Amazon doesn’t want to compete with Netflix or other biggies for watch time and subscriber dollars. I just want you to watch some videos and spend some money.

That’s why all of Amazon’s “premium” video is bundled in their Amazon Prime subscription offer, which gives you free shipping and other goodies. It is Amazon’s most powerful weapon. For years, Bezos has said he will give you similar things Transparent it made you a lot more likely to stand around and order a pair of shoes – or at least keep paying for Prime.

What Amazon says less often but is also true is that it has built a great business by selling subscriptions to other people’s video services – services like Discovery +, for example. Amazon sells those subscriptions through its “channels” offer, and keeps a large portion of the money it pays for those each month. To do this, it is useful to have things like that Jack Ryan, the series with John Krasinski as Tom Clancy’s action analyst / hero, to get people watching the video on Amazon. Come for free shows, then maybe buy some more.

So Amazon doesn’t want to dominate Hollywood. He just wants a tip. But even this point of view has been difficult to obtain, and Bezos has been adamant for a while that the way to achieve it is not via niche shows like Transparent more – it’s comprising or making great blockbusters that many people will watch.

What explains The Lord of the Rings and the NFL, and that explains MGM: Give Amazon a giant movie brand that everyone has heard of and always wants to watch – James Bond – and then a bunch of other things that could turn into something, maybe, one day. MGM owns the rights Rocky, for example, which is already being turned into more movies, but maybe there’s a way to make a Rocky Extended Universe.

What the hell is a Rocky Extended Universe? Nobody knows! But it has been the conventional wisdom in Hollywood for the last few years. No one knew you wanted to watch movies on the Guardians of the Galaxy, or a TV show on Wanda Maximoff and Vision. But now that Disney owns Marvel, it has taken advantage of the company’s dark superhero store and turned it into giant, popular shows. It’s the playbook.

And that playbook, by the way, requires you to have the stuff instead of renting it. Next was that Disney and Comcast and all the other big media companies were doing well to let streamers like Netflix and Amazon borrow their old TV and movie shows, but those days are over. Meanwhile, finding other studios that make great movies and TV shows for you is getting harder and harder. Sony, for example, which made clothes for everyone, is now off the table because it has long-term business with Netflix and Disney. Amazon needed to buy … something.

So: Amazon is betting billions – if the deal goes through, it will be the company’s second-largest acquisition, after paying $ 13 billion for Whole Foods – on a Hollywood acquisition that could give it the ability to become a little more competitive , in a side business, against people who take very seriously only in that activity. If regulators allow it.

Amazon’s argument for the world’s Klobuchars, by the way, will be clear: I’m a small player of entertainment, and the purchase doesn’t reduce consumer choice.

On the other hand: If you don’t like the fact that Amazon runs a store that sells batteries and sells its batteries in that same store, you may see similar parallels in running a movie store and selling your movies. Or, you may simply have a problem with one of the most powerful companies in the world using their billions to buy something. We will find out.

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