After months of speculation, Amazon Wednesday formally agreed to snap up MGM, one of the most iconic brands in Hollywood. The $8.45 billion purchase price is a tad less than the $9 billion figure that had been floated, but it’s still a ton of money for a company that saw its best days decades ago. And yet, Jeff Bezos and his Amazonians clearly see value in the studio — not so much for what it has been making in recent years but for what it produced in the past. Mike Hopkins, the former Hulu and Sony exec who now heads up video for Amazon, admitted as much in a press release announcing the agreement. “The real financial value behind this deal is the treasure trove of [intellectual property] in the deep catalogue that we plan to reimagine and develop together with MGM’s talented team,” he said. Translation: Get ready for Rocky: The TV Series and the Legally Blonde animated movie, coming to Prime Video in fall 2023.
As we saw last week at the very depressing broadcast upfronts, Hollywood’s decades-long affection for recycling past successes has turned into something of an obsession in the streaming age. The entire town seems to have simultaneously decided the only way to break through the clutter of Peak TV+ is with new iterations of stuff that worked before. Original ideas such as Mrs. Maisel may be marvelous for Emmys and critical raves, but the path to real success is through Franchises, or so the suits in charge seem to believe. They’ve seen the success Disney has had with Marvel and Star Wars, both with movies and via Disney+, and they want in on that action. This is why Netflix has dropped big sums on everything from Millarworld to the Knives Out movies, and why Stranger Things will likely be generating spinoffs for a decade. It’s the reason HBO, which rarely used to do remakes and spinoffs, is now working on new twists on Game of Thrones and Sex and the City. And even before the MGM deal, franchise fever explains Amazon’s decision to fork over $250 million* just to get the chance to retell the story of Lord of the Rings (*actual series not included).
Content Goldmine: So what sort of IP will Amazon be able to dig out from the MGM vaults? The press release for the merger cited the following titles from among the studio’s roughly 4,000 movies and 17,000 TV episodes: 12 Angry Men, Basic Instinct, Creed, James Bond, Legally Blonde, Moonstruck, Poltergeist, Raging Bull, Robocop, Rocky, Silence of the Lambs, Stargate, Thelma & Louise, Tomb Raider, The Magnificent Seven, The Pink Panther, The Thomas Crown Affair, Fargo, The Handmaid’s Tale, and Vikings. That doesn’t mean each of the aforementioned is about to get spun off into something new. In the case of the Bond movies, for instance, there are other stakeholders who get a very significant say in deciding what does or doesn’t get made with 007. It should also be noted that all the great titles from the Golden Age of MGM (think The Wizard of Oz and Singin’ in the Rain), as well as anything the studio made or acquired before 1986, are actually owned by WarnerMedia rather than MGM, thanks to a big deal media mogul Ted Turner made decades ago.
Leaving aside these significant asterisks, there are plenty of other reasons the MGM purchase could work for Amazon, even beyond giving Amazon Studios more pre-sold franchises to exploit. While Amazon streaming platforms Prime Video and IMDb TV already have healthy libraries, MGM brings tens of thousands of new hours of movie and TV content, which can be seeded across both services. It won’t all happen overnight, of course, since MGM has deals with other networks and streamers already in place. But in a few years, Amazon will have a pretty decent library of well-known titles it owns and can monetize, rather than just stuff it rents from someone else. That’s important because unlike any other major streamer, Prime Video is both a subscription service and a platform that actually sells and rents movies and TV shows. If it sees you watching, say, Rocky for free on Prime Video, it might then ask you if you want to rent Rocky III for 99 cents. It does this already, of course, but when you buy a Warner Bros. movie, Amazon just gets a few cents for handling the deal. Now it’ll get all 99 of them (well, minus whatever gets paid in residuals).
The other thing the deal gives Amazon is control of the cable network Epix. I’ve already read speculation that Amazon doesn’t have a need for a linear channel, and perhaps that is true. But I wonder why it wouldn’t at least explore the idea of using a cable platform to drive folks to Prime Video? Epix doesn’t have a massive subscriber base — the last estimate I saw of its size a few years ago was 15 million customers — but it still generates revenue and could benefit from Amazon’s scale. As it is, the streaming version of Epix is available via the Amazon Channels subscription program. Why would Amazon just trash a brand, especially if the existing Amazon Studios team could take oversight of day-to-day operations? Or maybe the play is to just use the Epix name: I am pretty sure Amazon execs are looking to rebrand IMDb TV into something less awkward-sounding. Epix is currently a pay channel, but perhaps it becomes the name of Amazon’s main free TV service, with or without a cable component. (For that matter, the MGM Channel would also be a better name than IMDb TV.)
One word of caution: While Amazon and MGM have announced their marriage, it still needs the blessing of federal regulators. Even though there’s nothing glaring that stands out as being particularly anti-competitive with this deal, there are plenty of folks in D.C. (and probably even some in the Biden White House) who think Amazon is already too big and needs to be broken up. Even if history suggests this agreement will be fine, assuming it’s guaranteed to sail through would be a mistake.