Amazon (AMZN) has had great success in its aggressive expansion from an online book retailer to a mega corporation that sells and delivers everything you can think of. Outside of just online retailing, Amazon Web Services (AWS) has become a massive part of the firm’s future business path with ever-growing demand for cloud computer platforms and APIs.
Now it seems like not a few months go by when another announcement is made of Amazon acquiring its next large corporation. Whole Foods and iRobot have been some major recent ones with Amazon pushing into the supermarket and consumer electronic appliance businesses. But the more interesting push for Amazon has been its push into the entertainment industry from a variety of angles.
Why Entertainment?
Video games, movies, and television shows have all been a larger focus for Amazon recently with the company making its second biggest acquisition ever in Metro-Goldwyn-Mayer (MGM) and paying just under a billion dollars for video live streaming service Twitch. That’s all before Amazon put more than a billion dollars into its new The Lord of the Rings: The Rings of Power show which only has the rights to a fraction of J.R.R. Tolkien’s works.
Clearly Amazon is trying to get in on the lucrative streaming service competition that Apple, Disney, and Paramount have put large efforts into to compete with the likes of Netflix, Hulu, HBO, and others. The play seems to be to make its Prime Video service such a great value that more people will become members of Amazon Prime as the streaming service is included with the membership. That’s after all how they’ve integrated Twitch and other services with Prime to add value for customers.
How’s It Going?
The problem for Amazon is that its entertainment push has seen mixed success, and that’s being generous. MGM was acquired for more than $8 billion and the company has no real strong IPs outside of James Bond and Rocky. Those two franchises account for all but five of MGM’s 20 highest-grossing films. Outside of those two giants, MGM’s biggest intellectual property might be Legally Blonde, not exactly in the same class unless it's early 2000s again.
Meanwhile, Twitch remains the leader in its market but has faced a series of controversies in recent years while competitors such as YouTube have gained market share. Additionally, Amazon has barely been able to bring to market any video games after opening its video game division 10 years ago. The company has had to cancel development of its Lord of the Rings MMO and shooter Crucible among others while only being able to release The Grand Tour Game and New World on major platforms. Amazon Game also published the strongly successful Lost Ark MMO.
Numerous canceled games with only two successful releases and publishing another one isn’t exactly great progress in ten years. Of those three The Grand Tour Game hardly garnered much interest while New World and Lost Ark had strong starts but were then overrun with complaints from gamers shortly after release. Even still, Amazon did start out its video game division with a focus on mobile applications so it's still relatively early on in its major AAA video game development.
But rocky starts with major releases certainly does not end with Amazon’s video game developments. The Lord of the Rings: The Rings of Power seems so far to be a massive billion dollar mistake. The new show was gathering concerns from fans early on for how far it will stay faithful to the source material in addition to a sadly expected controversy surrounding diversity in the show. The biggest problem so far though is that the show is just plain bad and boring. Something that almost all sides can agree on whether a consumer or critic and whether a Tolkien nerd or a casual fan of hobbits .
It’s just one show, but an example of how difficult it's been for Amazon studios to successfully enter the entertainment world. Prime Video is used by a large number of people but that is almost entirely due to it being packaged with Amazon Prime, not because people want to pay a monthly subscription for the content it offers exclusively on the streaming service. The best thing about Prime Video is that it acts as a remnant of the old on-demand catalog offered through Comcast or Verizon so people can still pay $5 to rent the new James Bond movie or watch Elf when Christmas time comes.
Where Does Amazon Go From Here?
The real question revolving around Amazon Studios is whether this is really an integral part of the business for Amazon or is just a fun little side project. The corporation obviously had a much bigger interest in online retailing, shipping and delivery services, and web services among many others. A hugely successful entertainment branch would be extremely profitable as well but right now it feels more like Amazon is the outsider trying to enter a world it has no real connection to. It doesn't have a string of connections with filmmakers and actors like streaming services such as HBO do. Neither does Amazon have a collection of acquired video game developers that could match Microsoft or Sony.
The company certainly has the capital to continue pushing forward and trying to gain significant market share in these big entertainment industries but so far it appears to be going about it the wrong way. The acquisition of MGM could certainly prove to be worthwhile as it's been in business for a long time but again the number franchises it owns that would bring big box-office numbers is no higher than two and neither of those lends itself to being able to create some cinematic universe like that of Marvel, DC, or Star Wars.
Meanwhile, the franchise that could expand into multiple shows, movies, and games hasn’t passed the first pass, in fact it looks like it shall not pass at all.
