The COVID-19 pandemic was very profitable for Amazon and it is taking advantage of its strong cash position to take on Disney+ from a position of strength with a new acquisition that will be finalized and announced on Tuesday or Wednesday. Consumers bristled when Amazon purchased Whole Foods in 2017 for $13.7 billion USD and it looks like Jeff Bezos is about to spend almost $9 billion for MGM Studios.
Update: It’s official. Amazon today (May 26, 2021) announced that they have entered into a definitive merger agreement to acquire MGM for a purchase price of $8.45 billion.
Hollywood studio executives are apparently reeling at the amount that is under negotiation; which some are calling a “gross overpayment” for the studio. Overpayment has never been a problem for Jeff Bezos and he clearly feels that content is king right now with so much competition from rivals Netflix and Disney+.
Amazon Prime has 126 million subscribers in the United States and more than 200 million global subscribers which includes Canada as well. Amazon Prime definitely qualifies as a value-added service.
Amazon Prime’s main perk is its free two-day shipping. Its Prime Video is simply an added value element included in your Prime membership. Unfortunately, Amazon has never officially been very transparent about how many Prime subscribers are actively using the Prime Video service. We can’t be the only people who love Bosch. VOD is a huge opportunity for Amazon long-term.
In January, Prime had 150 million subscribers, meaning the service added 50 million new customers from Jan. 30, 2021, to April 15, 2021.
The pandemic was also excellent for Disney+ which added tens of millions of new subscribers and earned a huge new audience with The Mandalorian and exclusivity over the entire Marvel MCU.
Amazon just announced some price changes in regard to Amazon Music HD in order to compete with Apple Music and Spotify, and this new acquisition of MGM Studios will alter the movie and television VOD landscape in a significant way.
MGM Studios owns a number of movie and TV franchises, including James Bond, Rocky, Legally Blonde, The Pink Panther and Stargate. The studio also produces current hit TV shows, including “The Handmaid’s Tale” and “Fargo.”
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling.”Mike Hopkins, Senior Vice President of Prime Video and Amazon Studios.
MGM is also heavily invested on the television side with a number of popular reality TV shows, including “Shark Tank,” “Survivor,” “The Real Housewives” series and “The Voice.”
MGM Studios also owns Epix, the premium pay-TV service that has climbed significantly in value over the past 5 years.