Amazon.com announced on the 26th that it will acquire Metro-Goldwyn Mayer (MGM), a major US movie production company. The total acquisition price including debt is $ 8.45 billion. Under the umbrella of MGM, which is known for producing popular spy movies such as the “007” series, it will expand video content for more than 200 million paid service “Prime” members.
MGM is a long-established store established in 1924, and is involved in movies such as “Rocky” and “Robocop” and TV programs such as “Pink Panther“. In the past, Sony invested and formed a business alliance, but after the bankruptcy in 2010, the US hedge fund Anchorage Capital Group and others now hold shares.
Amazon provides a video distribution service via the Internet under the name of “Prime Video” for members of the paid service “Amazon Prime“. With the acquisition of MGM, the company’s popular works can be distributed on its own service, aiming to compete with Netflix and Walt Disney, which are competing in the video distribution market.
The video distribution market is growing significantly due to the expansion of “nest-filled consumption”. Netflix has more than 200 million members, and Disney’s “Disney +” has more than 100 million members in less than a year and a half since its entry in the fall of 2019. The competition for excellent content is intensifying, with the three companies, including Amazon, spending more than $ 10 billion annually on content production and acquisition.
A successful acquisition of MGM will be Amazon’s second-largest M & A (merger / acquisition) after the US food supermarket Whole Foods Market, which it acquired for $ 13.7 billion in 2017. However, in recent years, US Congress and antitrust authorities have become more interested in whether M & A by major US IT (information technology) companies is hindering competition. For Amazon, the examination by the antitrust authorities is likely to be a hurdle in the future.