Industry experts decode implications of the Amazon-MGM deal for India
Amazon’s acquisition of MGM in a $8.45 billion deal has the global entertainment space all excited. MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming. Amazon will help preserve MGM’s heritage and catalogue of films and provide customers with greater access to these existing works. Through this acquisition, Amazon will empower MGM to continue to do what they do best: great storytelling.
Some industry observers think that this acquisition is more for increasing content depth of a platform, than to impact the cinema business. Netflix did witness a negative impact when Disney pulled out its content and started Disney+. Making own web series/ franchise content and films has become more important as owner of the IP and content is king. It is primarily due to the scale of opportunity that Indian cinema offers these films due to the dubbing of content into multiple languages (Hindi and regional languages); New marketing initiatives (having voiceovers of leading Indian actors) and new form of scripting for regional and Hindi languages so that audiences can relate to the subject; no production house would want to lose on the above opportunity.
Commenting on the merger, Karan Taurani, Vice President - Reseach Analyst (Media & Consumer Discretionary), Elara Capital, said, “There may be some selective English films content which may come direct on OTT too if a platform aims to temporarily invest in subscriber addition, however the economics won’t be supportive as it won’t be possible to replicate theatrical collections. Also, the overall impact of these select films won’t be much as the English genre has only 12% contribution to India’s box office. We believe Amazon’s acquisition of studios will only impact the window period (other release formats – OTT and satellite), which is very high in the global markets (about 120-150 days) vis-a-vis in India, which is already low at 40-60 days. Expect more large films to hit either the simultaneous release route or lower window period globally, except India.”
In an increasingly digital-first world as far as the media & entertainment industry is concerned, the Amazon-MGM deal coming on the back of the Discovery-Warner Media deal is clearly reflective of the tectonic shift in amalgamation of content creation and distribution ecosystems. Pradeep Dwivedi, CEO, Eros STX India, remarked, “In this instance, Amazon is clearly interested in acquiring significant chunks of exclusive TV and film content for its Prime Video service as it competes with Netflix, Disney, ErosNow and other streaming video services. MGM is a great fit for any streaming service because of its phenomenal legacy, great content, and promise of sustained creativity. The pandemic has also played a role in expediting such deals, as the traditional value-chain of content monetisation have been substantially disrupted and replaced with innovative ones such as OTT-First/ PVOD/ TVOD, and layered services within SVOD/ AVOD consumer markets.”
Abhigyan Jha, Indian Film Producer, Screenwriter, Director and Founder, Mrinal Abhigyan Jha Productions said, "I call it JB (Jeff Bezos) buys JB (James Bond). The problem is that the entire MGM deal is valued only at $ 8.45 billion which I find very difficult to believe. I would value the James Bond franchise alone at $ 9 billion. If you recall Star Wars franchise was sold for $ 4.5 billion years ago. James Bond is the longest running franchise, much longer than Star Wars. I would say that the James Bond franchise is worth much more than the Star Wars franchise since it is based on one character and for the next 200 years James Bond can be played by a new guy and keep on running. It is much more difficult to do Star Wars than James Bond. Why MGM valued only at $ 8.45 billion is an interesting question? How do you value a content engine like MGM? MGM was launched in 1924 that’s almost 100 years. 100 years of content library should be worth tons. I think it is a steal for Amazon and they are going to be greatly benefitted by it."
As far as India is concerned, India continues to have an appetite for a big base of the audience who like watching like scale driven films in cinemas due to limited outing options and cinema being a family outing, unlike the West, where people go to the cinema only for select films.