Editorial of the “World”. What wouldn’t we do to try and become the king of the entertainment jungle? Amazon on Wednesday, May 26, signed a check for 8.45 billion dollars (6.92 billion euros) to capture the famous roaring lion of Metro Goldwyn Mayer (MGM). This operation constitutes a new stage in the movement of concentration in the film production sector, under the pressure of the rise in importance of streaming sites, that is to say of streaming content on the Internet. The main platforms, such as Netflix, Hulu (Disney), Apple or Amazon, are looking to expand their catalogs in a hurry to attract more and more subscribers.
MGM was valued at around 5.5 billion dollars when the cable operator Comcast and Apple were presented, a few months ago, as potential buyers of these legendary almost century-old studios. By paying a premium of 40%, Amazon has spared no efforts to satisfy its new ambitions in entertainment, which serves in part as a lead product to boost its turnover in e-commerce. Its streaming site is in fact accessible to subscribers of its Prime service, which allows them to benefit from free delivery of products purchased on the Amazon site. Jeff Bezos’ group has every interest in pampering them: these members spend twice as much as regular customers.
Gain precious years
With a market capitalization exceeding $ 1.6 trillion and a cash position of over $ 70 billion, the e-commerce and cloud computing services giant has deep enough pockets to overpay its acquisition in the cinema, where it remains. behind Netflix despite its 200 million subscribers. Above all, the operation allows him to buy time. Even if the MGM catalog, with its 4,000 films, is aging, despite some flagship products such as the “James Bond” saga, the know-how of its production studios will allow Amazon to gain precious years to catch up.
The challenge for the Seattle giant is not to be left behind. Disney recently bought Twentieth Century Fox. At the same time, opportunities in the production market are scarce. Traditional studios are less and less inclined to license their catalogs, which they prefer to reserve for the companies to which they belong. Warner Bros. works with HBO, Walt Disney Studios with Disney + and Paramount Pictures with Paramount +.
In this race for subscribers, streaming sites are forced to invest several billion dollars each year in new productions. Netflix just spent $ 450 million on two new installments of Rian Johnson’s film, With knives drawn, with Daniel Craig. Amazon plans to respond with the first season of a series on The Lord of the Rings, for 465 million.
This overbidding raises the question of independent production, which risks having more and more difficulties to find its place, for lack of being able to attract enough subscribers. But she also questions the evolution of the behavior of spectators, who adopted streaming en masse during the pandemic. Admittedly, weaned from the cinema for several months, they rushed into theaters during the deconfinement. Is this a fleeting craze, or will streaming continue to grow? By investing so much money in MGM, Amazon is betting that the second option will eventually win.