Amazon was already an important player in the film and streaming businesses, but on July 26, the tech company catapulted itself up to the likes of WarnerMedia and Disney with the purchase of Metro-Goldwyn-Mayer Studios. Marcus Loew founded MGM in 1924, and grew it into one of the most important studios in Hollywood. But what does Amazon do with a nearly 100-year-old movie studio?
Amazon Prime Video is fundamentally different than other streaming platforms by virtue of being part of a larger ecosystem. While customers can get Prime Video separately, the company’s larger goal is to introduce them to the whole suite of (more expensive) Prime services like faster Amazon delivery, Amazon Music Prime, Prime Shopping, and Prime Reading. It’s the same kind of obvious-value marketing that movie theaters use when they make the tiny bag cost just one dollar less than the giant bag. Why spend $8.99 on just Amazon Prime Video when you could get music, shipping, and everything else for a few dollars more?
That makes Prime Video’s goals more specific than other companies. New streaming movies and shows help Amazon keep customers subscribed to the service, but without the same level of pressure felt by a service like Netflix that are entirely ruled by content. This creates a slightly higher upside for Amazon to gamble on massive projects in hopes of adding a few people to an ecosystem that, in theory, becomes indispensable. It can take big swings on Prime Video projects because it’s all additive. Which is where MGM’s IP comes in.
The MGM archive is filled with recognizable titles, the biggest being the James Bond franchise. With ownership over the collection, Amazon now owns the rights to Silence of the Lambs — though it doesn’t own the rights to Hannibal Lecter — Creed, the Legally Blonde movies, Robocop, and Pink Panther. Unfortunately, one thing the deal doesn’t include are the streaming rights to most of MGM’s classic Hollywood titles like The Thin Man, Ben-Hur, Singin’ in the Rain, and The Wizard of Oz, which are owned by Turner Broadcasting and WarnerMedia.
According to Amazon’s latest quarterly earnings report, there are over 200 million Prime subscribers and 175 million of them have streamed something on Prime Video. While new movies like Tom Clancy’s Without Remorse keep the service in the spotlight, it’s hard to imagine that a blockbuster acquired from Paramount Pictures played a major role in growing the total number of Amazon Prime subscribers.
But owning a major franchise like James Bond means becoming the exclusive destination for a giant swath of fans who will sign up for a subscription in order to see what’s next. Having played host to Bond movies for years (then losing them to Hulu and Netflix every few months), Amazon is well aware of how many people have streamed the sequels, or more importantly, rented a Bond movie without subscribing to Prime.
Supposing the internet-giant can get the Broccoli family, the franchise’s controlling dynasty, to agree, it’s easy to imagine the rebooted version that will take shape after this November’s No Time to Die — which will now be an Amazon project that likely hits Prime Video shortly after it arrives in theaters. The deal also frees MGM films up from the traditional studio box office rat race. The studio won’t have to stake its business on a blockbuster making a billion dollars because it will have value outside of its initial run in theaters.
But perhaps even more lucrative is the idea of bingeable TV, and event series born from MGM’s IP. Owning the next Bond movie sounds flashy, but creating the first James Bond TV series might be the golden goose Amazon is counting on for this entire acquisition.
When it comes to reducing churn — streaming-service lingo for customers unsubscribing — there’s nothing quite like a hit series. A 10-episode season can represent three months of subscriptions, plenty of time for using something to become a habit. Or worst case scenario, it’s an annual reason for someone to return even if they cancel their sub every time a season ends. This is a strategy Amazon is comfortable with. It’s producing an ambitious Wheel of Time series, and spending nearly $500 million on the first season of its Lord of the Rings series. Adding James Bond on top feels like a natural fit.
And that’s only one possibility. Amazon could create a boxing series built around Creed franchise, the live-action Tomb Raider, Poltergeist, or any of MGM’s other lingering IP. While none of these might have the same pull as 007, they could be valuable in keeping subscribers around, not to mention the studio’s post-1986 library of films which helps bolster Prime Video’s historical offerings a little bit.
Amazon CEO Jeff Bezos confirmed that these franchises were instrumental in the company’s acquisition of MGM during a shareholders meeting that was held the same day as the deal was announced.
“The acquisition’s thesis here is really very simple. MGM has a vast deep catalogue of much beloved intellectual property,” Bezos said on the call. “And with the talented people at MGM and the talented people at Amazon Studios, can reimagine and develop that IP for the 21st century. It will be a lot of fun work and people who love stories will be the big beneficiaries.”
While Amazon’s MGM acquisition will bolster the back catalogue of Prime Video, it also provides the studio with the nostalgic fodder it needs to go up against a Disney Plus or WarnerMedia, which intend to cannibalize every bit of IP in order to attract attention. Whether that strategy works, or if subscribers require a little more originality in their offerings, is unclear; Amazon’s committed to the expensive on-going series strategy, but neither of those huge expensive shows have actually come out yet. The Lord of the Rings series may not need to prop up Amazon all on its own, but it does still have to justify its hefty price tag, and the same will be true of whatever MGM IP Amazon decides to produce. And $8.5 billion is a lot of ground to cover.