Amazon has announced that they’ll soon be procuring Hollywood Studio MGM for $8.45 Billion. The company made it official on Wednesday that they’ll be buying the famous movie studio in U.S., which is home to James Bond franchise.
The ultimate goal set by Amazon after the procurement of MGM studio is to boost up their competition against the present streaming platform rivals like Netflix and Disney+. Acquiring MGM will help Amazon to ramp up their collection of Movies with around 4000 movies and more than 15,000 TV shows including the James Bond franchise.
Mike Hopkins, senior vice president of Prime Videos and Amazon Studios said that, “The real financial value behind this deal is the treasure trove of IP in the deep catalogue that we plan to reimagine and develop together with MGM’s talented team.” He also brings light to the fact that this deal is very exciting and it will provide so many opportunities for high-quality storytelling.
Amazon Prime and its market: An overview
Amazon’s Prime Video confronts a long list of competitors including Netflix Inc., Walt Disney Co.’s Disney+, HBO Max and Apple Inc.’s Apple TV+. The companies are increasing spending and expanding in international markets, aiming to get all eyes on them as the pandemic shifted the audience to binge-watch shows online.
The eminent streaming services are also searching for brands that they can expand and add on libraries of older shows and movies. Analysts have said this is a big jump for another round of consolidation of media properties after a brief downfall during the pandemic.
Amazon has also made a large audience the fans of live sports and has picked up lucrative licenses to stream games, including a long-term deal with the National Football League (NFL) that was estimated to cost about $1 billion per year.
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MGM : about the studio and their deal with Amazon
Privately-held MGM, or Metro Goldwyn Mayer, was curated in 1924, owns the Epix cable channel and is a home to popular TV shows including “Fargo”, “Vikings” and “Shark Tank.” Also, the prominent bridge for channelling James Bond franchise.
MGM started a formal sale procedure in December, when it was estimated to be worth about $5.5 billion. The acquisition is Amazon’s second-biggest after Whole Foods Market, which it bought for $13.7 billion in the time of 2017.
According to Reuters Breaking views-
“The price represents a lofty premium relative to other deals. The price is about 37 times MGM’s 2021 estimated EBITDA – or almost triples the enterprise value-to-EBITDA multiple that Discovery’s deal implied for AT&T’s content assets.”
In April, Amazon posted its fourth consecutive record quarterly profit and was able to fetch more than 200 million Prime loyalty subscribers. Amazon shares rose 0.3% in the early trading cycle.
Lucrative Franchise Rights
Amazon has bagged up Academy Awards over the years and slowly moved from art-house fare toward content with wider appeal within the audience. The MGM acquisition adds a jumper to that move, giving it rights to James Bond, one of the most lucrative franchises in film history that has earned around $7 billion at the box office around the globe, according to MGM.
The potential to dig up this intellectual property, by making new shows and films based on popular characters, will definitely help Amazon draw viewers to Prime. Still, efforts by Amazon to profit off MGM’s creations won’t be easy, or cheap.
In many cases, MGM’s content is in contract of multi-year deals with television networks, the former Amazon executives said. Amazon cannot channel MGM’s reality show “The Voice,” on air, because it is in the hands of NBC according to the contract.
Bringing a new revised version of the “James Bond” saga to Prime viewers may be a particularly challenging task, the sources said. The terms under which MGM acquired the franchise left control in the hands of the Broccoli family who are the Bond films’ producers.
On the news of acquisition, Jeff Blackburn, Amazon’s former senior vice president overseeing content and M&A, made a comeback. He had left Amazon earlier this year. Incoming Amazon CEO Andy Jassy showed trust on Blackburn by hoping that he would shepherd a complicated merger.
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