0:03 why did amazon buy mgm
0:05 this is the question on the lips of many
0:07 after it was reported that amazon had
0:09 taken over legendary motion picture
0:10 company metro goldwyn mayer
0:14 in an 8.45 billion dollar move
0:16 the takeover was announced not too long
0:18 ago in what happens to be amazon's most
0:21 significant takeover move yet
0:22 in this video we will explain the
0:24 reasons behind amazon's decision to make
0:26 such a strategic move
0:27 and what this decision could mean for
0:29 the entertainment industry moving forward
0:31 forward [Music]
0:44 jeff bezos company amazon has taken over
0:46 metro goldwyn mayer in a deal worth over
0:48 8 billion dollars
0:50 the supply chain conglomerate now
0:52 controls a vast portfolio of motion
0:53 picture content
0:55 numbering more than 4 000 films worth
0:58 more than 17 000 hours of film
1:00 this move is not one the decision makers
1:01 at amazon would have made lightly
1:03 as it appears to be a highly strategic
1:06 move but before we explore the reasons
1:07 behind the move
1:09 let us review the lofty position mgm
1:12 occupies in the entertainment industry
1:14 mgm has been a brand that has led the
1:17 way in the industry for generations
1:19 the studio was the brain ox behind
1:21 classic movie franchises like rocky and
1:23 james bond
1:25 mgm also made a name for classic
1:27 releases like 12 angry men and chart
1:29 bursting tv shows like vikings and
1:31 handmaid's tales
1:32 so when it comes to television
1:35 entertainment only very few studios have
1:35 the reputation
1:39 and portfolio that mgm has so in taking
1:40 over mgm
1:42 amazon is only signifying its intention
1:44 to be a major player in the hollywood circuit
1:45 circuit
1:47 the statistics behind the move are
1:50 mind-boggling to say the least
1:51 from the surface it is clear that this
1:53 acquisition places amazon on a strong
1:55 footing to launch its prime video service
1:56 service
1:58 in direct competition with disney plus
1:59 and netflix
2:01 the financial value of this move is not
2:03 in liquid cash but a treasure chest of
2:06 video catalogs that amazon can use to
2:09 its advantage amazon prime may also
2:10 remake some of the classic movies on the catalogue
2:11 catalogue
2:14 and profit immensely from it amazon's
2:16 prime outfit is only a small portion of
2:18 the company's vast
2:20 investment worth hundreds of billions
2:22 currently amazon prime
2:24 has a 200 million plus subscriber base
2:26 and over the course of the last year
2:29 over 175 million videos were streamed on
2:30 the platform
2:33 by prime subscribers during this period
2:35 the company had added thousands of more
2:37 tv shows and films to the platform
2:40 to boost its catalogue this move was
2:42 evident even before it was announced
2:45 sometime in mid-may variety magazine
2:46 announced that the deal was being
2:48 negotiated on behalf of amazon by
2:51 hopkins then on may 24th
2:52 amazon announced that it was nearing a
2:55 deal with mgm
2:57 before the completion of the deal mgm
2:59 was owned by several equity firms
3:01 some of which are solas alternative
3:03 asset management highland capital
3:05 management and anchorage capital group
3:07 this move follows a trend that has
3:09 gripped hollywood in recent times
3:11 netflix and disney currently dominate
3:14 the online content library landscape
3:16 so to meet up rivals have adopted an
3:17 acquisition strategy of buying up
3:19 contents and movie studios
3:22 instead of producing their own contents
3:22 for instance
3:25 at t currently merged warner media with discovery
3:26 discovery
3:28 a tv company in a move that made it the
3:29 second largest media firm
3:32 in the world by revenue with disney
3:34 occupying number one spot
3:36 both at t and disney have their own
3:37 streaming services
3:40 namely hbo max and discovery plus
3:42 the same merger and takeover moves have
3:45 been witnessed across the industry
3:49 so why has amazon taken over mgm
3:51 the answer to this question is quite
3:53 simple the logical explanation is that
3:54 the company wants to build its
3:57 subscriber base on amazon prime
3:59 currently the platform has about 200
4:00 million subscribers
4:03 all over the world who pay more than 119
4:04 yearly to access contents on the platform
4:06 platform
4:08 in data released by amazon prime figures
4:11 show that about 175 million of the population
4:11 population
4:13 actually watch videos on the platform
4:15 which is not very far from the 200
4:17 million subscribers on netflix
4:20 so owning mgm is a strategic means of
4:21 expanding its library
4:23 by adding 4 000 films on top of the
4:26 estimated 13 000 films already present
4:27 in their catalogue
4:29 access to many more films will give
4:31 subscribers even more incentives to
4:33 renew their membership on the platform
4:36 if we compare the 17 000 films amazon
4:38 prime will have with netflix's 4 000 films
4:39 films
4:40 you will see what advantage this move
4:42 will give amazon
4:44 and on the business side of things more
4:46 prime subscribers will translate to more
4:48 revenue for amazon
4:49 records show that prime subscribers
4:52 spend 133 percent more money annually
4:55 than non-prime subscribers however
4:57 amazon's other rivals do not have this
4:59 level of customer loyalty
5:01 acquiring mgm will only be a move that
5:04 plays to the company's strength
5:05 of all the benefits amazon could milk
5:08 from this move the james bond movie
5:09 franchise could be a slippery slope for
5:10 the company
5:12 james bond is mgm's biggest movie
5:15 franchise and every single bond movie
5:16 has been a hit
5:18 however mgm does not fully own the franchise
5:19 franchise
5:22 only half of it the other half is owned
5:23 by michael g
5:24 wilson and barbara broccoli through
5:27 their uk production company eon
5:29 eon owns full creative rights over the franchise
5:30 franchise
5:32 not mgm and the company has ultimate
5:34 control over every single production
5:37 detail of bond films
5:39 so while amazon may now own distribution
5:40 rights to the franchise
5:42 they do not have any influence over the
5:45 production and release of bond films
5:47 insiders have also said that the
5:48 partners are known to be very
5:50 controlling and protective of the
5:52 franchise and have sometimes clashed
5:54 with mgm executives in the past over
5:57 release dates and storylines
5:58 as if to reiterate their artistic
6:00 control of the franchise the partners
6:01 released a statement
6:04 saying for better or worse we are the
6:06 custodians of this character
6:09 we take that responsibility seriously we
6:10 are committed
6:12 to continuing to make james bond films
6:15 for the worldwide theatrical audience
6:17 if this statement is anything to go by
6:19 amazon may have little or no say
6:20 regarding one of the biggest catalogues
6:22 on their portfolios
6:24 this may even make it tough for them to
6:25 stream the movie on their platform
6:27 before it hits the cinemas without the
6:29 approval of michael wilson and barbara broccoli
6:30 broccoli
6:31 with everything that's been happening in
6:33 hollywood in recent months it is clear for
6:34 for
6:35 all to see that the future of
6:37 entertainment is moving away from
6:39 cinemas to online streaming
6:41 cinemas will continue to serve a section
6:43 of the market but the big players know and
6:44 and
6:46 understand that online streaming is the
6:48 future where megabucks will be
6:50 made they also know that subscribers are
6:52 only going to remain loyal to platforms
6:55 with hundreds and thousands of contents
6:57 this realization is behind the intense
7:00 competition taking place in the industry
7:02 this move by amazon will have
7:03 far-reaching implications for the industry
7:04 industry
7:07 taking over mgm now gives amazon prime
7:08 an advantage
7:10 and their rivals know it so we expect
7:11 this takeover
7:13 not to be the last we will see in the
7:15 industry as there will be many more
7:17 not too long ago disney and netflix
7:20 reported a subscriber growth slowdown
7:21 and this cannot be as good a sign for
7:23 both companies
7:25 amazon prime is expected to release its
7:27 subscriber base due to its access to
7:28 more content
7:29 so the last thing netflix and disney
7:31 want is to hit a snag just at the time
7:33 when amazon prime
7:35 is on the rise to keep pace both
7:37 companies will have to create more content
7:38 content
7:40 amazon is not resting on its ores either
7:43 as the giant is spending more than 465 million
7:44 million
7:45 dollars on a new lord of the rings
7:48 series so netflix and disney will have
7:50 to expand their library if they do not
7:52 want to be blown out of the water
7:53 the options available to streaming
7:55 companies now will be to
7:57 1. buy more studios similar to what
7:59 apple is trying to do
8:01 two buy more content from studios like
8:03 amazon has with mgm
8:06 and three buy each other out with apple
8:08 trying to buy netflix
8:10 no one can say for sure who will win the
8:12 race but the winning brand will
8:13 have to be very innovative in its
8:15 approach as well as spend a treasure
8:17 chest of cash to get by
8:18 netflix may be one of the strongest
8:20 streaming brands in the industry
8:22 but it does not have the cash to burn
8:24 like amazon or apple
8:26 with this new move by amazon it may have
8:28 taken the lead for now but this may be
8:30 short-lived if apple goes big and buys
8:32 netflix or many more studios
8:34 apple not netflix represents amazon's
8:36 biggest threat to global dominance and
8:38 there is one reason for that
8:40 apple has more cash to burn and with money
8:41 money
8:44 comes influence let us know your opinion
8:46 about this move by amazon in the
8:48 comments section below
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8:54 thanks for watching [Music]
