Amazon’s acquisition of MGM Studios and Netflix’s acquisition of Hollywood’s fabulous Egyptian theater are the culmination of a paradigm shift in the film industry. With the closure of theaters and the massive consumption of digital products, the pandemic has accelerated this transition.
After weeks of speculation and 18 months of negotiations, Amazon managed to hunt down the Metro-Goldwyn-Mayer (MGM) lion. This is not the first marriage between Hollywood and big technology, but it is an important example of how digital platforms can devour Hollywood.Acquired the legendary studio established 97 years ago, more than 170 Oscar winners and owners of legendary publishers for USD 8.4 billion (EUR 6.910 million) James Bond, This is a manifestation of the arduous battle for control of the market. This business, and the merger of AT&T/WarnerMedia and Discovery’s content divisions announced last week, foresee a new golden age for viewers, which will emerge in the next few years.
The pandemic has changed TV consumption habits. According to data from California-based research company Conviva, compared with the same period in 2019, the screen viewing time on global digital platforms in the last three months of 2020 has increased by 44% globally. With these data in hand, large companies began what Wall Street analysts called an “arms race” on Wednesday to seize the most powerful arsenal. The huge archives make the provision of content more attractive to subscribers.Analyze digital trends Deloitte Discovery The average user has subscribed to five services, two more than before the pandemic. Analysts believe that the time required to sign license agreements and research contracts with telecommunications companies so that they can dispose of their products is a handful. The most fascinating movies and series will be exclusively available on NBC Television Network’s Disney+, Paramount+, Netflix, HBO Max and Peacock services.
Indeed, Hollywood has always been the thermometer that rules the world. In 1989, with the rapid development of Japanese technology, the Japanese company Sony acquired Columbia. In October 2017, AT&T Telephone Company announced an acquisition agreement with Time Warner, which was completed in June 2018, and WarnerMedia was born. Last week, AT&T decided to spin off its WarnerMedia backbone and merge with Discovery (Discovery), another content creation giant, to form a strong product division that will provide support for its platform. The merger is planned to end in 2022. The two companies can integrate HBO novels, CNN news, Animal Planet and Discovery documentaries, Oprah Winfrey’s life programs, and popular TV broadcasts, such as Food Network. .
In that war, buying MGM was understood as: Considerable (Hollywood Studios) has reached several content sales agreements with various TV channels and platforms (Disney, Netflix, WarnerMedia…), which will become a competitor once the regulator confirms the approval of operations on Wednesday. several years. This content (4,000 titles in total) will be migrated to Amazon Prime, which has 200 million subscribers, but there is still no set date.
Indeed, the best year for MGM was decades ago. It began to decline in 1952, when antitrust laws forced MGM to Considerable Get rid of its cinema. And his old ideas about Hollywood movies collided with the new style of the 1960s. In 1969, gambling tycoon Kirk Kerkorian (Kirk Kerkorian) bought 40% of MGM (MGM) shares, and all he did was to open a MGM casino hotel in Las Vegas , And cut the film business at the same time. He is more interested in the power of the brand than anything related to movies, he bought 40% stock The company’s. In 1985, the buyer was Ted Turner, who was more interested in catalogs than works at the time. This is why MGM games before 1986 were in the hands of WarnerMedia (the current owner of Turner) and were excluded from those acquired by Amazon.Strangely, Turner returned the items without these contents to Kocorian, and then he took the Considerable To an Italian businessman. After a few more laps, it returned to Kerkorian, who sold it to Sony in 2005 for US$5 billion (2 billion was used directly to repay debt). The loophole was so big that MGM declared bankruptcy in 2010. Since then, it has been managed by the holding company MGM Holdings Ltd.
“Buying Amazon has nothing to do with becoming a studio owner. It is a matter of influence. MGM gives them credibility rather than dominance.
Tim Hanlon, consultant
So, what makes MGM attractive? In addition to the other audiovisual products on the other platforms discussed above, they also have James Bond. Eon Productions of the United Kingdom owns the rights to characters created by Ian Fleming and has signed a distribution agreement with United Artist, a subsidiary of MGM Group.
Tim Hanlon, the founder of Vertere Group, a consulting firm specializing in media and entertainment, explained this trend: “The linear and scarce TV model has collapsed and has become a victory for on-demand video. This is very rich. Now, it all depends on the choice. The content library is more important than the company’s business.”
“Buying Amazon has nothing to do with becoming a studio owner. This is a matter of influence. Hanlon said that MGM gave them credibility, not dominance. Experts believe that Bezos’ company can deepen the distribution window. This is the time that a movie or series must be shown before jumping to digital or physical media (such as DVD or Blu-ray). In the United States, the period is about 90 days, and it has been renegotiated to 45 days: movie theaters lose business Enjoy new content earlier on digital platforms. “The biggest challenge right now is how to make these windows profitable and modernize them. The analyst added that Amazon is in a unique position to do this because it knows all the consumer habits of users. The Hollywood that is maintained in the projection of the physical location is crumbling. The earthquake was triggered by Netflix, which curiously purchased an iconic movie theater in January, the Egyptian Theater in Hollywood, and is currently considering room renovations.
These advertisements revolutionized the market. Netflix, with approximately 205 million subscribers, is struggling to maintain its leading position. In a more cautious announcement issued in April, the company stated that Sony will become one of its main suppliers between 2022 and 2026. Starting next year, 15 or 20 films released by film companies will make a leap and reduce the projection window. Cinema, with digital services. Sony is also obliged to provide Netflix with the works it produces first, and these works are only output on demand. It will provide ammunition so that the digital giants can launch increasingly fierce competition.