It was not exactly a surprise, because rumors had been saying for some time that VoD platforms were hanging around the MGM studio – on sale for some time – and Amazon was the name that sounded the most. The Wall Street Journal even confirmed the exclusive negotiations with close sources and leaked the potential figure with which the sale would close. Finally, it has been. Amazon just bought the Hollywood studio MGM, making it the owner of a vast library of classic film content and iconic brands such as James Bond movies.
Amazon has just announced the purchase agreement reached with MGM, the classic Metro Goldwyn Mayer. The purchase price will be 8,450 million dollars (which makes it the second most expensive purchase in Amazon’s history) and, with this move, Amazon will be the owner of a catalog of “more than 4,000 movies” and about 17,000 TV shows.
The catalog is so diverse that it ranges from the hit A Very Legal Blonde or Robocop to classics like 12 Merciless Men. Of course, the rights to James Bond films are also added here, a kind of jewel in the crown of acquired film rights. Among the series that are part of the study are Fargo, Vikings or The Handmaid’s Tale.
The purchase, since it is a total acquisition, also includes the titles that MGM is working on, among which are, according to Amazon’s press release, some of the most desired films of the coming months. This is what happens with the latest installment of James Bond or with the already quite newsy House of Gucci.
But why has Amazon bought this study and what has led them to pay millions of dollars? His press release presenting the maneuver does not give many details, as is often the case in these cases. He mentions, yes, that the purchase will complete the work they do at Amazon Studios, where they are much more focused on series production.
Of course, the purchase strengthens Amazon’s position in the streaming market and gives them a position of power to fight Netflix, but the reality is much more complex. The links that explain the purchase extend beyond streaming and reach e-commerce or advertising.
As explained in an analysis by The New York Times, the essence of Amazon’s strategy is in the loyalty of its consumers and Prime is the key piece to establish that relationship of loyalty to the brand. Buyers who are Prime tend to spend, on average, twice as much on products in the online store than those who are not.
So Amazon needs to shield those Prime consumers and keep them from leaving the service. The company itself has recognized that those who use Prime Video – free for its Prime customers – are more likely to renew their quotas when they expire or to enter the paid version if they have been in a trial. Therefore, giving content – and giving attractive content – makes sense.
At least he has it from that point of view. There are voices that already question the model and that there is a real cause-and-effect relationship between those who watch series and movies and those who buy (a researcher points out, without much consideration, that if Amazon embarked on the content war, it was simply because Jeff Bezos wanted to do series and movies).
What this means for legendary film brands
Amazon will see how things change but so will the mythical film brands that are linked to the studio. For example, for the James Bond saga – which is already one of those that uses product placement more widely – the purchase by Amazon could further enhance that aspect. As I explained before the closing of the AdAge purchase, advertisers hope that the purchase will bring deeper brand integrations with the Bond universe.
That is, more tie-ins with brands and much more “shoppables” are expected. For example, they could be converted into points that lead to sales using the technology that Prime Video already uses for other things. The X-Ray is a feature that, when you pause the broadcast, shows IMDb data about what you see on the screen. Advertisers already envision a world in which pausing the Bond movie takes you to the products seen in the picture.