Streaming: Amazon gives prime billing to video
A deal signed last week to buy MGM for $8.5 billion shows video is no longer an afterthought at Amazon, said Lucas Shaw in Bloomberg.com. With 175 million Prime subscribers, Amazon boasts “the second-largest paid streaming service in the world,” behind only Netflix. But because Prime Video is offered “as a freebie,” bundled with its fast-shipping offer, Amazon “often isn’t named as a streaming giant.” It’s also had “only a fraction of the hits” of Netflix; acquiring MGM could change that. The fabled Hollywood studio has a library of more than 4,000 films and 17,000 TV shows, including Rocky, Tomb Raider, and the James Bond franchise. CEO Jeff Bezos has been “adamant that the way to get” people to keep using Amazon’s services “isn’t via niche shows like Transparent,” but rather with “big blockbusters,” said Peter Kafka in Vox.com. This is likely Bezos’ last hurrah before stepping down as chief executive on July 5. He sees that “the media world is consolidating” and there aren’t many worthwhile targets left.
Amazon still clearly overpaid, said Felix Salmon and Sara Fischer in Axios.com. Many on Wall Street considered the studio “a distressed asset,” and other tech giants, including Netflix, passed it over “for far less money.” On top of that, media acquisitions “almost never work out” as planned anyway. But Amazon is so big it almost “doesn’t need to justify any of its spending at this point.” Its shareholders seem happy to take Jeff Bezos’ word on faith. Not every deal Amazon makes, though, is automatically “an industry crusher,” said Tara Lachapelle in Bloomberg.com. “No buyer causes more of a brouhaha than Amazon as it hahas all the way to the bank.” But “other than cheaper avocados,” its $13 billion acquisition of Whole Foods in 2017 hasn’t “obviously accomplished a whole lot.”
“Why does Amazon have a streaming video service at all?” asked Shira Ovide in The New York Times. Amazon executives rarely discuss their goals for Prime Video. When they do, the justification is usually that a video service is “one more reason for people to stick with Amazon’s membership program” and keep buying things through Amazon. However, it’s hard to find much evidence that Prime Video is actually a huge difference maker in “stickiness”; Amazon’s Prime customers seem to find enough value in free shipping. Yes, it could be that “Amazon is playing the long game” and has some grand plan like putting ads on Prime Video to sell more products. But it’s equally possible that Amazon is just “so rich and successful,” it can afford an $8.5 billion splurge because Jeff Bezos just wanted to be in the entertainment business.