Bezos. Jeff Bezos. The fall-out of the Amazon-MGM buyout

Amazon gobbling up the mighty Hollywood film studio MGM (Metro Goldwyn Mayer) for $8.4 billion is a game-changer in the global film streaming business and is directly aimed at giving the numero uno in the business, Netflix, a run for its streaming money. MGM comes with about 4,000-odd films. The pre-1986 films were already sold off to Sony, but some movies still remain in MGM’s subsidiary companies. The immediate major attraction for the streaming service could be the Bond films.

Amazon and its boss Jeff Bezos, who will be relinquishing his CEO job in July, always want to be number one in any business, and so the Hollywood buy is not surprising, though others were also gunning for it. But the purchase price is 40 per cent more than what Apple and Comcast valued it at. Also big studios are not facing good times and it will become increasingly difficult for MGM or legacy studios to match the money that Netflix or Amazon Prime put up. It is a slightly thin version of MGM that Bezos has paid this huge price for since even classics like Singin’ in the Rain, The Wizard of Oz and Gone with the Wind have already been sold off to Sony.

But even with this price, Amazon will not own the entire Bond franchise. Half of the Bond business is owned by the producer Barbara Broccoli and her brother Michael Wilson. Broccoli especially is a difficult customer, having blocked various efforts to increase appeal and range of Bond films. She also decides on the cast and the story and Bezos obviously would not want to deal with the feisty Bond producer.

The immediate question is whether the much-awaited No time to Die, canned last year, will have a theatrical release in October or will come out on Prime only. A theatre release is more likely since Bond action is better seen on huge screen with the sound effect of studios.

While Bond films are a big hook, the main intention for Bezos will be to ramp up the Amazon Prime membership, which is ₹1,000 in India (free next day delivery and all movies on Prime) and $119 in the US. The 200 million members of Prime are a double treat for Amazon. They buy more than double of others on Amazon ($3,000 annually) and also watch movies. “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 per cent year on year,” Bezos had said during the last quarter earnings call.

“In India, Prime will not be able to score much because of this acquisition. It doesn’t do anything to the India business. The HBO next and Discovery merger does,” a top official of Hotstar Disney told this reporter. But the old Bond movies have a big pull and might change the numbers a bit in India. During the annual shareholder meeting on May 25, Bezos explained his strategy: “The acquisition thesis here is very simple. MGM has a vast deep catalogue of much beloved movies. We can reimagine and redevelop that IP (intellectual property) for the 21st century. People who love stories will be the big beneficiaries. “

The nearly 4,000 film library of MGM, which will come into the Amazon Prime library, include such biggies as Rocky, Pink Panther, The Silence of the Lambs, Basic Instinct. Amazon’s own studio has been splurging money but nothing worthwhile has come out of it. The biggest such budget is $464 million for one season of Lord of the Rings. Amazon also has developed a love for low-budget Oscar winners, snapping up Sound of Metal last month. Here MGM producers could help to help in ideation and production, an area in which Prime has had little success.

For Amazon, which is a $1.6 trillion company, the MGM spend is no big deal. It had bought Whole foods grocery chain for $13 billion, a strategy which Tatas is following here buying Big Basket for ₹1 billion.

Amazon’s foray into films, after it conquered the world of books, will take time to fructify. But its main strength will be its IT businesses, where it is total master, posing a great challenge to Apple’s hardware business as well. By 2019, Amazon had sold 100 million of its voice enabled speakers Echo. “In the span of a decade a product spawned by Bezos’s love of science fiction and infatuation with invention had become a universally recognised product whose miscues and challenges to conventional notions of privacy were widely covered by the media,” Brad Stone writes in the new book Amazon Unbound: Jeff Bezos and the invention of a Global Empire.

Prime will be banking heavily on the Indian market where OTT segment has grown exponentially during the lockdown. Bezos has often said that India is the third biggest market after US and China for retail. This could soon apply to streaming services. But Netflix is a mean competitor for Prime to have in India having come out with blockblusters, but Prime has hit back with superhits like Patal Lok. It will be a battle where there will be ‘No Time to Die’. The Federal News