Amazon's Acquisition of MGM
(Note: I originally began this as a Weekly Reel news piece, but with all the information about the deal and history of MGM, it was better to expand into a short essay.)
Amazon acquired MGM for $8.45 billion a month ago. This is Amazon’s first legacy media acquisition in the present era of giant media acquisitions for the competition for subscriptions through their DTC streaming apps. This acquisition is different because it’s the first where Big Tech is stepping directly into Hollywood’s historic industry. But before treading further, a brief history of MGM is in order:
Marcus Loew was a dominant theater chain owner based in New York who needed various kinds of films to supply his many large movie theater palaces in big cities at the time when theatergoing was a weekly activity for many Americans (and Europeans). He acquired Metro Pictures Corporation in 1919 but was dissatisfied with their relatively slim output. So then he bought both Goldwyn Pictures and Louis B. Mayer Pictures in 1924, which he named Metro-Goldwyn-Mayer—the King Ghidorah triumvirate of film studios (perhaps to one-up the Orthrus, Adolph Zukor’s Famous Players-Lasky). Under the leadership of Louis B. Mayer, who handled the contracts and the stars (or more precisely their personality) and boy-wonder, head of production Irving Thalberg (pictured above), MGM quickly became a profitable film studio through its use of big-budget films showcasing multiple stars in first-rate movie palaces; a process not dissimilar to how tentpole films and Disney’s strategy functions today. The biggest difference being that MGM directly owned movie theaters and binding, long-term contracts for all the stars, directors, and writers, which gave each of the films a production line quality with interchangeable creatives moving in and out with Thalberg organizing nearly everything.
MGM enjoyed success from the 1920s to 1950s, but mostly in their first decade (their “Golden Age”) until Thalberg’s early death in 1936. In 1959 MGM was forced to divest their Loews movie theater chain after a Supreme Court case forbidding studios/distributors from directly owning exhibitors (movie theaters). At the same time, their production line quality shifted into package deals that favored small groups of producers/directors—many of which were the New Hollywood auteurs—over studios, thereby ending MGM’s earlier, more glamorous studio existence. Over the next four decades MGM was bought and sold many times, bringing asset sell-offs and staff layoffs each time in order to control the seemingly always growing debt. As part of a consortium, Sony Pictures acquired MGM’s valuable Culver City studio complex and film library in 2004. And finally in 2010, MGM filed for bankruptcy.
A decade later MGM explored sales so their creditors could focus on other dying companies, which began Amazon’s year-long courtship until last month’s mariage blanc.
It appears that this acquisition satisfies both companies’ simple content-economic needs: Amazon Studios needs intellectual property (IP) content and MGM needs the stability in order to produce high-quality films. So in a sense, MGM’s returning to their older studio form after remaining in limbo for the last five decades.
In the trade press, reporters immediately began pointing their fingers at Amazon’s need “to mine [MGMs] intellectual property to create new hits” from their catalogue of 4,000 films and 17,000 TV shows. The Guardian’s influential film critic Peter Bradshaw dismissed the deal as part of the “blobbification process” that saw Fox consumed by Disney in 2019. Mike Hopkins, senior VP at Amazon Studios, stated that
“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. It’s very exciting and provides so many opportunities for high-quality storytelling.”
In its official announcement, Amazon noted it would “help preserve MGM’s heritage and catalog of films and provide customers with greater access to these existing works. Through this acquisition, Amazon would empower MGM to continue to do what they do best: great storytelling.”
[Always watch out when non-creative executives use the world storytelling preceded by positive adjectives.]
To return to Bradshaw’s criticism, he waxes nostalgic (I’ve never understood how to use this strange phrase before, but I think it fits here) for MGM’s past, which made “gorgeous musicals of the golden age” and was “associated with their talent” that produced a back catalogue that Amazon wants to mine for branded content. Amazon “wants to hit the commercial sweet spot of something excitingly new based on something reassuringly old.” This is the first thesis of Derek Thompson’s quite good book (I recommend!), Hit Makers: How Things Become Popular:
Most consumers are simultaneously neophilic—curious to discover new things—and deeply neophobic—afraid of anything that’s too new. The best hit makers are gifted at creating moments of meaning by marrying new and old, anxiety and understanding. They are architects of familiar surprises.
In the last decade and a half, Disney has been profitably exploiting this concept in its various reimaginings, sequels, prequels, live-action remakes, etc. of their own back-catalogue as well as Pixar’s, Marvel’s, and Lucasfilm’s. The opposite strategy is Netflix, which enjoyed a considerable early lead in subscriptions and therefore was able to focus on producing mammoth amounts of original content before the studios started pulling their content, which is why nothing seems to be on Netflix anymore. And now the game among Big Tech and Hollywood is in creating content for each of their own streaming apps, which requires a lot in order to maintain the customers’ attentions and prevent subscription churn. While Amazon was mostly following the Netflix model in creating high-quality original content, they now seem to be focusing on large investments in high-quality branded content from others, as the MGM and Lord of the Rings deals both show.
Because of this transition, and Bradshaw’s nostalgia for Judy Garland’s fabulous tap-dancing on a famous yellow-brick road, he laments:
It’s pretty depressing, of course, and Amazon did not get to be the retail colossus it is by specialising and indulging individual creativity. Its raison d’etre is to give you everything, to deliver anything you want, something that someone else has created. And so of course the real danger is that studio movies will become even blander and more uniform than before, and that they will no longer in fact be studio movies in that sense, no longer individual films from film-makers, but iterations of content. Hollywood was always commercial though, always in love with genre, always liable to be smitten by Amazon’s “If you like this, then you’ll like this … ” nudging. The danger is that individual artistry will be squeezed further out, and the human factor will lose out to the algorithm.
While I sympathize with the argument that individual creativity is stifled through algorithm-lead tentpole productions, that simply isn’t the case with MGM’s history, in particular during their so-called Golden Age that Bradshaw references. MGM conducted film productions from initial idea to distribution as a production-line of interchangeable parts based on the careful equation of genre, audiences, stars, and stories/plots, which we would call an algorithm if done today. Nonetheless, artistic talent in the studio-system flourished because of Thalberg’s command of that equation, who had a once-in-several-generations ability at pairing script with director and stars that created films which were highly profitable and became critically acclaimed classics over time. But after Thalberg’s death and the theater divestiture, MGM’s cash ran out and it descended from Hollywood’s Olympus, which made it an inhospitable place for their creative artists to flourish and create classics. In other words, the studio system triumphed over individual artistry. Especially when the system was in the business of high-quality film production. The real danger, and what has been obvious for decades, is that MGM doesn’t have a robust enough studio in which to foster individual artistry.
While it’s too early to speculate on what exactly will happen, Amazon Studios tends towards distributing original ideas made by indie/auteur filmmakers rather than the Disney® branded content approach. For instance, Amazon signed a four-film deal with Woody Allen in 2016, picked up Manchester By the Sea and The Big Sick, and like Netflix funds a handful of original series. If this remains their strategy, then MGM could experience a much-needed revival of their studio in a time when legacy studios are being folded into other companies and losing their souls.
