Jeff Bezos, meet James Bond.
Amazon said Wednesday that it has struck a deal to acquire the historic movie studio MGM for $8.5 billion, bolstering its efforts to become a top player in Hollywood.
The deal will give the e-commerce and cloud computing giant a famed studio and catalog of film and television titles to beef up its Amazon Prime streaming service, from the James Bond and "Rocky" franchises to TV series such as “The Handmaid’s Tale” and “Fargo.”
MGM is Amazon’s second-biggest acquisition ever following the $13.7 billion purchase of Whole Foods in 2017.
The deal comes amid a new round of consolidation in media as companies seek greater scale to compete in streaming against bigger companies such as Netflix and Disney. Discovery and WarnerMedia announced plans to merge last week. Smaller Hollywood players such as ViacomCBS, Fox Corp., Lionsgate and AMC are all likely to be acquired within a matter of years, many industry insiders predict.
The deal is a financial win for MGM, which was reportedly valued at just $5.5 billion, including debt, at the end of last year. Both Apple and Comcast have looked at acquiring MGM in recent years and determined its value to be about $6 billion, two sources familiar with those talks said. Comcast owns NBCUniversal, the parent company of NBC News.
Mike Hopkins, senior vice president of Prime Video and Amazon Studios, said in a press release that Amazon plans to create new content using MGM's stable of intellectual property.
"The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team," he said. "It’s very exciting and provides so many opportunities for high-quality storytelling."
The MGM buy also reflects Amazon's ambitions to be a major force in Hollywood. The company said last week that it was creating a new global media and entertainment division spearheaded by Jeff Blackburn, one of its highest-ranking executives. It has also allocated at least $465 million for the first season of its "Lord of the Rings" TV show, an unprecedented budget for a streaming series.
Despite launching Amazon Studios a decade ago, the company has had little success developing its own hit movies or shows and has instead relied on acquisitions from other studios such as "Manchester by the Sea" and "Borat."
The MGM deal offers Amazon a chance to create more hits in-house thanks to its library of well-known characters.
The most notable asset in terms of Amazon's ambitions is the Bond franchise, which MGM co-owns with Eon Productions, which is controlled by the descendants of Bond filmmaker Albert Broccoli. However, plans to expand the Bond empire into a streaming series are likely to be checked by the Broccolis, who have long believed that Bond belongs only on the big screen.