Amazon (NASDAQ: AMZN) announced that it has agreed to purchase MGM for $8.45 billion. This acquisition will bring MGM’s vast catalog of over 4,000 movies and 17,000 TV shows to Amazon Prime Video and is expected to complement the work of Amazon Studios which has focused mainly on creating TV content.
Amazon sees particular value in MGM’s treasure trove of intellectual property which it believes provides further opportunities for storytelling and one that it plans to reimagine and develop with MGM down the line. MGM’s popular content will be a strong addition to Amazon Prime Video’s library.
In its most recent quarterly earnings announcement, Amazon said that over 175 million Prime members had watched content on Prime Video in the past year and that streaming hours had increased more than 70% year-over-year.
Last week, AT&T (NYSE: T) announced that it would spin off its WarnerMedia segment and merge it with Discovery Inc.’s (NASDAQ: DISCA) entertainment business. AT&T would receive $43 billion and would hold a 71% stake in the new company.
This deal will also bring together the streaming services of both companies, HBO Max and Discovery+, to create a strong player in the increasingly competitive streaming space. The total number of HBO and HBO Max global subscribers stood at 64 million at the end of the first quarter of 2021 while Discovery said last month that it had 15 million DTC subscribers.
The new company will bring popular brands such as HBO, Warner Bros., Discovery, DC Comics, CNN, Cartoon Network and Animal Planet under one umbrella and own nearly 200,000 hours of programming. It aims to generate over $15 billion of direct-to-consumer revenues in 2023.
These deals will give the aforementioned companies additional advantage in the highly competitive streaming space alongside Netflix (NASDAQ: NFLX) and Walt Disney’s (NYSE: DIS) Disney+. Netflix ended the first quarter of 2021 with 208 million paid memberships while Disney+ had 104 million paid subscribers at the end of its most recent quarter. Disney said it is on track to reach 230-260 million subscribers for Disney+ by the end of FY2024.
The vast array of content that these companies have among themselves is their biggest strength. Amazon Prime Video has an impressive collection of content and the deal with MGM will bring it popular movies like James Bond, Legally Blonde, the Rocky franchise, Silence of the Lambs, and Thelma and Louise, along with TV shows like Fargo and The Handmaid’s Tale.
AT&T’s alliance with Discovery will provide customers with all-time favorite shows like Game of Thrones, Friends, and The Sopranos as well as movies like Batman, Wonder Woman and King Kong. Disney already has a massive library that encompasses the Marvel universe and Star Wars franchise, among others. Netflix has been investing in original content and has seen success with shows like Lupin and Bridgerton. Netflix plans to invest $17 billion in content in 2021 and bring out more originals this year than the last.
The entry of more streaming services into the market is an indication that streaming will gradually overtake linear TV. These deals are a sign that companies are doing their best to strengthen their footing in the streaming space and stay ahead in the race.
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