Amazon’s acquisition of MGM for $8.4 billion is the latest example of media industry consolidation, and big tech’s conquest of entertainment territory.

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Amazon’s enthusiasm for the purchase shows in the price, which is 40% higher than other bidders like Apple and Comcast were willing to pay for MGM. The nearly century-old film and television studio is not what it once was: A consortium bought its film studio in 2004, and most of its classic film library was sold decades ago. MGM still has some powerhouse assets, however, including the James Bond franchise, plus 4,000 other movies from MGM divisions United Artists and Orion. These include “Rocky,” “RoboCop,” “The Silence of the Lambs” and other popular titles.

Amazon will own only 50% of the James Bond franchise, however. The other half will remain in the hands of half-siblings Barbara Broccoli and Michael G. Wilson, movie producers long associated with the films. “We are committed to continuing to make James Bond films for the worldwide theatrical audience,” Broccoli and Wilson said in a statement. Yet some question Bond’s theatrical future beyond the forthcoming installment, “No Time to Die,” set for release in October. Amazon typically prefers to release its movies directly on its Prime Video service.

Analysts say Amazon’s acquisition of MGM at a premium is all about Prime, because owning the rights to content like the 007 movies will help bolster Amazon Prime Video in the ever-intensifying streaming wars. Both streaming pioneers, Amazon Prime Video and Netflix, are betting on movies with wide appeal to keep themselves growing, especially in foreign markets. In this way the MGM acquisition builds on the Amazon’s existing strategy of enhancing its mission-critical Prime membership program. Households with Prime memberships typically spend $3,000 a year on Amazon, more than double the spending of households without it, according to Morgan Stanley.

The Amazon-MGM deal highlights shifts in the streaming media industry and entertainment overall. As the New York Times reports, “The Amazon deal could emerge as a pivotal moment in the convergence of Big Tech and the entertainment industry. Instead of acquiring old-line studios, internet companies have grown under their own steam in Hollywood – until now.” The reversal can be owed to the reluctance of studios to license content to streaming services outside the corporate fold. Walt Disney Studios and Paramount Pictures, for example, must supply Disney+ and Paramount+.

This development is driving up the price of film libraries, which have become key assets for big studios. In April Sony Pictures struck licensing deals with both Netflix and Disney+, giving the streaming platforms exclusive rights to Sony TV shows and movies. The two deals will bring nearly $3 billion in revenue to the Japanese firm – much more than its expiring licensing agreements would.

Another way the media industry is changing is the diminishing status of studios like MGM as stand-alone companies. The streaming wars are driving consolidation as contenders seek to grow rapidly through acquisitions. AT&T, which owns HBO Max, recently announced plans to spin off its WarnerMedia group and combine it with Discovery. In 2019 Disney acquired most of Rupert Murdoch’s entertainment assets for over $71 billion. To deep-pocketed players like Amazon, smaller studios like MGM are ripe for the picking.

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