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What the Amazon-MGM deal means for the streaming business

The nearly $8.5 billion merger deal between Amazon and MGM is official. MGM is the movie and TV studio behind the James Bond franchise, <em>Legally Blonde</em> and other popular films.
Michael Sohn
/
AP
The nearly $8.5 billion merger deal between Amazon and MGM is official. MGM is the movie and TV studio behind the James Bond franchise, <em>Legally Blonde</em> and other popular films.

Editor's note: Amazon is among NPR's financial supporters.

Amazon's nearly $8.5 billion deal to purchase the film and television studio MGM is official. The two companies announced Wednesday that MGM is now a part of Prime Video and Amazon Studios — cementing the merger that was first announced last May.

This is the second-largest acquisition for Amazon after purchasing Whole Foods. The purchase of the movie and TV studio behind iconic films like the James Bond franchise, Rocky, The Silence of the Lambs and Legally Blonde is just the latest in big-name media and streaming-service mergers.

Last year, AT&T announced a merger of WarnerMedia with Discovery, encompassing major networks like HBO, CNN, HGTV and others, to create a streaming behemoth. The U.S. government approved this plan last month.

The European Commission concluded that the Amazon and MGM merger "would not significantly reduce competition in the markets." But the U.S. government has yet to weigh in either way on the deal, but the two companies signed off on the plan regardless.

It's unclear when Amazon Prime subscribers will start to see the full MGM catalog, which includes more than 4,000 film titles and 17,000 TV episodes.

Consumers will likely be impacted by this deal in a different way, entertainment industry experts told NPR.

"There is no doubt that in my mind that 2021 will go down as a great year for streaming," David Offenberg said. "It's all downhill from here."

Today, Amazon announced it would purchase the film and television studio, MGM, for $8.45 billion.
Kaelin Mendez / Getty Images
/
Getty Images
Today, Amazon announced it would purchase the film and television studio, MGM, for $8.45 billion.

Offenberg is an associate professor of finance at Loyola Marymount University, and is an expert in entertainment finance.

He said deals such as this multibillion dollar merger ultimately means "less choice for consumers and higher prices" down the road.

"As the streaming wars continue we get consolidation. That's expected and already happening," he said.

Bradley Gorham, an associate professor and chairperson of communications for Syracuse University, predicts an impact on the types of new television series and movies developed by Amazon with its new access to MGM's intellectual property.

"Amazon is trying to bolster its reserves of intellectual property to take on Disney and WarnerMedia" and other streaming services that have deep catalogs of video games, movies, and TV.

Disney bought LucasFilm and Marvel Studios, giving the company the ability to develop exclusive content for Disney+ using storylines and beloved characters from Star Wars or the Marvel Universe. The company has developed hugely popular programs like Loki, WandaVision and The Mandalorian as a result.

Amazon wants to do the same thing, Gorham said. That means likely building off of beloved series like Rocky or even the James Bond franchise, he said.

Consumers may enjoy spin-offs based on stories and characters they love, but they lose out in other ways, says Offenberg.

"This will mean there will be less unique stories," he said as Amazon churns out revamps.

Offenberg said, "We are in this situation because we like the brands we know, but it's going to be harder for new ideas to shine through."

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