Amazon is not a company that is content to rest on current successes. The company seems to constantly be innovating new products and technologies. And, when not innovating, Amazon loves to buy as much as its customers. The latest acquisition for Amazon is its purchase of Metro-Goldwyn-Mayer movie studio for a price of roughly $8.45 billion. While not as large as Amazon’s 2017 purchase of Whole Foods (at $13.7 billion), nonetheless it is a substantial investment that seems destined to take Amazon even further into the entertainment business.
The purchase appears to be an effort to increase its Prime Video streaming to help it compete with rivals such as Netflix and Walt Disney Co. By acquiring MGM, Amazon gains more than 4,000 films including key franchises such as James Bond and a strong TV catalog of 17,000 shows that includes The Handmaid’s Tale and more. Prime Video is an important element in Amazon’s customer retention strategy and gives consumers value to stay with Amazon’s membership program.
Other entertainment companies are not waiting around to see what happens. Discovery announced a $43 billion deal to merge with WarnerMedia after a spinoff from AT&T. Sports content also has Amazon’s attention – it signed a deal with the NFL to broadcast Thursday Night Football in 2022.
What will you watch next?
Group Activities and Discussion Questions:
- Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
- Show a news video describing the Amazon purchase: https://youtu.be/msEU9hR6YP0
- Which strategy is Amazon using by purchasing MGM? Why?
- Discuss with class: Why did Amazon purchase MGM?
- Which competitors will be most pressed by this acquisition? Why?
- Discuss how grocery retailers will compete with the combined Amazon/MGM?
- How can these companies market their services to compete with the company?
- Is the MGM acquisition a good move by Amazon?
Source: Associated Press; New York Times; Wall Street Journal; other news sources