Amazon Inc., agreed to buy the Metro-Goldwyn-Mayer (MGM) movie company for $8.45 billion, a bet that a nearly century-old Hollywood icon can feed an insatiable demand for streaming content.
The proliferation of streaming services, including newer arrivals such as HBO Max and Disney+, has put pressure on Amazon to acquire more programming.
Chief Executive Officer Jeff Bezos has made no secret of his desire for movie moguldom, and MGM’s vast backlog provides an abundance of streaming material, not to mention an opportunity to mine the iconic James Bond and Rocky franchises for new films and television shows.
Moreover, with retail rivals like Walmart Inc. rolling out more sophisticated online stores, Amazon must work even harder to keep its 200 million Prime subscribers loyal.
Pachter said that Amazon’s studios produce a few hundred hours worth of television shows and movies a year. MGM adds a back catalog of 25,000 hours that Amazon could divvy up between its Prime Video offering, or its free-to-stream, ad-supported IMDb TV.
Amazon shares were up less than 1% Wednesday morning in New York.
The takeover is Amazon’s biggest acquisition since it agreed to buy Whole Foods in 2017 for $13.7 billion but follows investments of about $11 billion on content for its streaming video and music services last year alone. Mike Hopkins, senior vice president of Prime Video and Amazon Studios, in a statement pointed to MGM’s “deep catalog” as justification for the purchase.
MGM has been seen as a takeover target for years, but was never able to close a sale before. The company made a fresh push last year, when it reportedly hired advisers to seek offers.
Previously, Amazon has acquired smaller startups it perceived as a threat — footwear seller Zappos, say, or Diapers.com parent Quidsi. Amazon also has snatched up-and-comers in new business lines, such as the game platform Twitch or Kiva, which makes warehouse robots.