After days of rumors, Amazon on Wednesday finally completed a deal to purchase the movie studio MGM and its storied film and TV library for $8.45 billion. That means Amazon Studios now owns properties like the "The Handmaid's Tale," the "Rocky" franchise and, most notably, the continuing adventures of James Bond.
On its surface, a major company with a seemingly infinite bankroll acquiring a struggling, nearly 100-year-old studio isn't a big deal to TV and movie lovers. It is, however, a Prime example (pun intended) of the ever-evolving streaming wars that are making just about every major movie or TV show available at the click of a button — for an increasingly hefty price tag.
First and foremost, it's worth noting how big that $8.45 billion price tag is for a studio mostly known for Golden Age Hollywood musicals like "Singin' in the Rain" and "The Wizard of Oz," both of which are now owned by Warner Bros. It's more than what Disney paid for Marvel in 2009 ($4 billion) and LucasFilm in 2012 ($4.05 billion) combined.
MGM can certainly be an asset for Amazon Prime Video with the "Rocky" and "Bond" franchises and other popular titles like ""Legally Blonde," "Moonstruck," "Poltergeist," "Raging Bull," "Robocop," "Silence of the Lambs," "Thelma & Louise and "The Pink Panther." That doesn't even include its small-screen offerings like "Fargo" and "Vikings" and reality TV favorites "Shark Tank" and "Real Housewives."
Acquiring MGM gives Amazon Prime Video more than 4,000 films and 17,000 TV shows to play with, Mike Hopkins, who heads Prime Video and Amazon Studios, told CNN's Frank Pallotta.
"The real financial value behind this deal is the ... deep catalog that we plan to reimagine and develop together with MGM's talented team," Hopkins said. "It's very exciting and provides so many opportunities for high-quality storytelling."
While it's great to control that content, it's nowhere near as lucrative as "Star Wars" and the Marvel Cinematic Universe, or having same-day access to first-run, big-budget movies like HBO Max.
The amount Amazon paid for MGM was reportedly "about 40% more than other prospective buyers, including Apple and Comcast, thought MGM was worth," according to The New York Times' Brooks Barnes and Nicole Sperling.
So why would Amazon spend so much on this content? The two-pronged answer is quite simple: Because it can, and to remind competitors that it intends to remain a major player in the streaming space.
Remember, Amazon also recently coughed up $80 million for the rights to exclusively stream "Borat 2," $125 million for "Coming 2 America" and $200 million for the upcoming Chris Pratt sci-fi flick "The Tomorrow War." It also greenlit a $465 million budget for one season of its still-in-development "Lord of the Rings" TV show.
But Amazon is not alone in its free spending. Consider recent outlays by Disney, Apple, AT&T (which owns WarnerMedia and HBO Max), Comcast (which owns NBCUniversal and Peacock) and Netflix. Apple gave itself a $6 billion budget for original AppleTV+ shows, Disney paid $71.3 billion for 21st Century Fox's assets in 2019 and AT&T just last week signed a $43 billion deal to combine its WarnerMedia and Discovery assets in an effort to strengthen HBO Max.
In the end, these are investments in content to sell more subscriptions to people like you. Netflix reported a global subscriber base of 208 million as of late April and Disney+ passed the 100 million subscriber mark after only 16 months of existence. Other streaming services lag far behind, with HBO Max reaching 44.2 million paying customers in April; Peacock hitting 42 million sign-ups in 2021's first quarter; Hulu at 39.4 million subscribers as of February; and ViacomCBS reporting a combined 36 million subscribers between Showtime and Paramount+.
It's trickier to decipher how many subscribers AppleTV+ and Amazon Prime Video have because those companies are more guarded with that data. For a service readily available on all Apple products including 1 billion active iPhones, it seems safe to assume AppleTV+ is doing well enough. Similarly, Amazon Prime customers also get Amazon Prime Video, and Prime passed the 200 million subscriber threshold last month.
That all boils down to streaming edging ever closer to becoming the primary method of consuming entertainment content, for better or worse. And the reason movie and TV fans should care about Amazon purchasing MGM is because such moves make it more likely we'll end up with a media landscape where almost anything you want to see is right there if you are willing to pay for it. And it just might cost you more than your old cable bill.
That's a storyline all pop culture fans should be invested in as the streaming wars continue.
