Is Amazon.com (AMZN) Stock An Interesting After Today’s News?

The streaming wars are heating up. Amazon.com, Inc. (NASDAQ: AMZN) announced this morning that it will acquire privately held MGM (the movie studio, not the casino) and its iconic lion roar for $8.45 bln. This was AMZN’s second largest acquisition ever, behind Whole Foods a few years ago, so it’s a big deal. The acquisition was not a complete surprise as the WSJ had been reporting over the past few days that a deal was imminent, but now it’s official.

Is Amazon.com (AMZN) Stock An Interesting After Today’s News?

What does this deal mean for the streaming world?

Amazon’s Prime Video offering will add a lot of content given that Metro Goldwyn Mayer is a huge studio in Hollywood and has been around a long time. Its vast library contains 4,000+ films, including James Bond, Legally Blonde, Creed, Rocky, Thelma & Louise etc. It also includes 17,000 TV shows, including The Handmaid’s Tale, Fargo, and Vikings.

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We do not think it’s a coincidence that this deal was announced so soon after AT&T (T) announced it would combine its WarnerMedia assets, including HBO Max, with Discovery’s (DISCA) entertainment and sports businesses to create a massive streaming service as a standalone company to compete better with Netflix (NFLX) and Disney+ (DIS). The message is clear: build massive amounts of content.

We think the deal is also perhaps a realization by Amazon that it will not be able to produce enough content on its own quickly enough to compete effectively. It does not want to be left behind by its streaming competitors.

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This deal along with the AT&T/Discovery deal tells us that Netflix’s recent stumbles on its net sub add growth is not a long-term concern about market saturation. The long-term dynamics for streaming look great and these deals show that big media companies agree.

Michael Rowels

Weekend Contributor. Writing for business and finance publishers has become his passion over the last decades after he completed a master's degree in Financial Management. Sharing some opinions and forecasts to thousands of readers is a routine job for him but he never promises to invest in one stock.