Amazon is in talks with US media company MGM for a possible $9bn acquisition deal for the creators of the James Bond and Rocky franchises.
An acquisition of MGM Studios will bolster Amazon’s streaming portfolio with strong content, most notably the James Bond Franchise; the fifth most-valuable movie franchise of all time grossing more then $7bn.
The acquisition would also help Amazon maintain its position in the video-on-demand (SVOD) market, which has become increasingly competitive since new entrants such as Disney, HBO and Hulu have gained subscribers.
MGM acquisition would give Amazon access to an extensive catalog
The talk of a possible take over comes before the anticipated release of No Time to Die, the latest instalment in the James bond franchise and the last in a generation of bond films starring Daniel Craig. While the new film will be a strong lure for new subscribers, an end of an era of films also gives the studio a degree of flexibility for new content.
MGM has an extensive catalog of over 4,000 films and 17,000 TV episodes and is also regarded as the number one unscripted television producer. Furthermore, the studios experience and ability in film and television production will also increase the capabilities of Amazon Studios.
In 2020 Amazon spent $11bn on content in 2020, therefore the acquisition would suggest a significant increase in content investment for 2021.
Media acquisitions increase as competition in the streaming market escalates
Amazon’s plans to acquire MGM would be one of many large media deals that have taken place in recent years. In March 2019, Disney completed the acquisition of Twenty-First Century Fox, Inc. The was deal valued at $71bn and included Fox film and TV studios, the FX networks, National Geographic and the Indian TV giant Star India.
Popular movie titles such as the X-Men franchise and Deadpool also improved its portfolio. This helped Disney accumulate 73.7 million Disney+ subscribers by October 2020, just 13 months after launch. The groups streaming platform HBO Max already has 64 million subscribers worldwide; the addition of Discovery is expected to accelerate its subscriber base.
More recently, AT&T announced a $43bn merger deal between WarnerMedia and Discovery to create a streaming platform with HBO, CNN, HGTV, Animal Planet and Food Network and the Warner Bros. movie studio
Amazon has produced strong original content such as Academy Award-winning movies such as Manchester by the Sea, The Big Sick and The Salesman. The acquisition of MGM would make sure Amazon doesn’t slip behind competition by securing content that can compete with the likes of Disney+ and Netflix.
Video steaming subscribers overtake pay TV subscribers
Large scale investments in media content are justified by the continued growth in popularity of steaming services. In 2020 Globaldata predicted the number of online TV streaming accounts will reach 1.1 billion by the end of the year, surpassing traditional pay TV accounts for the first time.
In Amazon’s Q1 2021 earnings report Jeff Bezos, Amazon founder and CEO announced. “As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year”. As the popularity of streaming services continue to grow, investment in new content is essential for maintaining growth.
Verdict deals analysis methodology
This analysis considers only announced and completed artificial intelligence deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.
GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.
More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.