Why Amazon Isn't a Major Movie Studio Despite Owning MGM and the Impact on Competition
Amazon's ownership of MGM has significantly enriched its streaming library, but it has not fully transitioned into a traditional major movie studio akin to Warner Bros., Disney, or Universal. Here, we will explore the reasons behind this distinction, the impact of MGM's acquisition, and the broader implications for competition and regulation.
Business Model
At its core, Amazon is an e-commerce and cloud computing company. Its venture into streaming through Amazon Prime Video is part of a broader strategy to enhance its subscription services. However, it has not fully shifted its focus to film production and distribution, leaving it distinct from traditional movie studios.
Content Strategy
While Amazon has ventured into film production, its approach emphasizes original programming and exclusive streaming rights over theatrical releases. This is a stark contrast to the priorities of traditional studios, which often focus on extensive theatrical releases. Additionally, Amazon's investments are more about enriching its streaming content library rather than becoming a dominant player in theatrical film production.
Acquisition vs. Production
The MGM acquisition is more about expanding its content library for streaming rather than entering the theatrical film production market. Amazon often collaborates with existing studios for its original films, further emphasizing its streaming-first strategy.
Market Position
Major studios like Warner Bros., Disney, and Universal have long-standing brand identities and market positions in theatrical releases. Amazon is still in the process of building its own market presence in this space. The film industry is heavily influenced by historical relationships and reputations, which take time to establish.
Focus on Streaming
Amazon's strategy centers more on competing in the streaming market like Netflix. This is evident in their investment in original content for Prime Video, designed to attract and retain subscribers. This streaming-focused approach is a key differentiator from traditional movie studios.
In summary, while MGM enhances Amazon's content offerings, its corporate strategy and focus on streaming set it apart from traditional major movie studios.
Impact on Competition and Monopoly Potentials
It is important to note that the acquisition of MGM by Disney through Disneyland also has implications for competition. If MGM was acquired by Disney, it would have given Disney operating rights to MGM, potentially leading to multiple streaming fees under one company. This raises concerns about the concentration of content under a single entity, similar to a potential monopoly.
Consumers who pay a monthly or annual fee for services like Disney are also paying for additional content through the bundle. This bundling can limit consumer choice and potentially stifle competition. Therefore, it is crucial for regulators to monitor such situations to ensure fair competition and prevent monopolistic practices.
Regulatory Implications
Given the potential for monopolistic practices and the bundling of content, the government should indeed look into this situation. It is essential to maintain the health and integrity of the entertainment market to protect consumers and foster innovation.
Conclusion
While Amazon's ownership of MGM has added significant value to its content portfolio, its corporate strategy and focus on streaming set it apart from traditional movie studios. The broader implications of such acquisitions and the bundling of content raise important questions about competition and regulation, highlighting the need for careful oversight to maintain fair and transparent markets.