Amazon's New Era With MGM

As Jeff Bezos prepares to pass the baton to the new CEO in July, Amazon.com, Inc. AMZN is showing no signs of stopping after posting impressive first-quarter results late a month ago with its largest strike in the "Streaming Wars" and its biggest push into entertainment to date.

Amazon Lost The Early Streaming Battle, But It Ss Determined To Win The War

As the demand for content rises, the new era for major Hollywood studio deals arises as the e-commerce and cloud titan has sealed the deal to buy MGM Holdings, the parent company of Beverly Hills-based MGM Studios, including its content portfolio and debt for $8.45 billion. According to the Wall Street Journal, this will be Amazon's second-largest acquisition since acquiring Whole Foods for $13.2 billion in 2017.

Merger Mania Is The Next Chapter Of The Streaming Wars

The most recent merger was two weeks ago when WarnerMedia and Discovery announced they will unify brands thatinclude CNN, TBS, TNT, HGTV, Food Network, Discovery Channel, Warner Bros. movie studio, and streaming services HBO Max and Discovery+, providing AT&T T with $43 billion in cash debt securities and WarnerMedia's retention of debt. But it was in 2019 when Disney's DIS $71.3 billion deal to acquire 21st Century Fox has set a new precedent.

Can MGM Be The Game Changer For Amazon?

MGM has been one of the few hallmark Hollywood studio franchises that wasn't invited to the M&A party but consolidation is in its DNA. Back in 1924, Metro-Goldwyn-Mayer came to life following the merger of studio firms Metro Pictures, Goldwyn Pictures, and Louis B. Mayer Pictures. It gave the world. "The Wizard of Oz," "Singin' in the Rain" and "Gone With the Wind" along with many other legendary creations.  Amazon is gaining name-brand movie hits like "Rocky" and "James Bond," along with a historic library that will help it give its streaming peers a run for their money.

Bezos, Jeff Bezos, made the case for $8.45 billion price tag by saying that MGM has a vast, deep catalog of much-beloved intellectual propert  that talented people at MGM and Amazon Studios can reimagine and develop for the 21st century. With more than 4,000 feature films and about 17,000 television series in its library, the film studio that dates back almost a century will be bring high-quality storytelling to Amazon's growing streaming service. In other words, MGM will help Amazon bolster its position in the increasingly crowded streaming space, although the Q1 report showed that Prime Video segment is growing as streaming hours were already up over 70% YoY over the past 12 months.

Don't Forget The Core Businesses Are Blooming

Q1 sales soared 44% YoY to $108.5 billion with income being $8.1 billion, up from $2.5 billion in the year-ago quarter.  Besides the profits from its core online retail business having soared, Amazon's cloud business added $1billion in profits compared with the previous year. Although Amazon doesn't disclose advertising sales, the company's "Other" category saw its revenue grow 77% YoY to $6.9 billion.

Prime Members Are More Engaged Than Ever

Prime membership is one of the holly grails of Amazon's business model. Besides creating a recurring revenue stream, it helps Amazon maintain its customers as it provides them with a range of attractive benefits. Prime members have continued to shop with greater frequency and across more categories than before the pandemic, with Q1 report showing Amazon has over 200 million paying Prime members.

Q2 Momentum

Amazon's guidance for its Q2 revenue is to grow at a rate between 24% to 30% which is quite strong considering it is up against in the second quarter of 2020, when lockdowns fueled its e-commerce segment. In other words, Amazon is projecting continued strength across all of its segments and the king of e-commerce has a habit of exceeding expectations, and it did just that on April 29^th when it outperformed revenue growth guidance of 33% to 40% with a 44% YoY increase.

Top Line Is As Strong As Ever

Q1earnings report showed U.S. sales accounted for 59% of total revenue as Amazon stepped up its capabilities during the pandemic. While U.S sales increased 40% YoY, international sales were up 60% and accounted for 28% of total revenue. Amazon made a lot of progress with widening its global reach in the first quarter, including the first international use of its cashierless Just Walk Out technology in London.

Retail Is Contributing More To The Bottom Line

Across the U.S. and international retail operations, operating margin more than tripled YoYto 4.9%, helping to push total operating margin during the first quarter from 5.3% to 8.2%. Although it was partially driven by lower pandemic-related costs, profitability was still much higher than before COVID-19 paralyzed the world. Net margin widened to 7.5% as well with net income of $8.1 billion more than tripling YoY.

Tomorrow Is Another Day

Amazon has been the leader in e-commerce for years, but the the pandemic took things to a whole new level. The company has invested heavily to solidify its dominant position across all fronts, including its infrastructure to increase the speed and reach of its shipping services. These costs ate into the bottom line but Amazon is working to lower them such as through its own last-mile delivery network. The first-quarter earnings report was strong across the board as the titan continued to rack up sales, widen margins,and benefit from consumer shopping trends. Considering both its impressive strengths and MGM's beloved intellectual property, there's no reason to doubt Amazon is also capable of winning the streaming wars. Key metrics arguably miss many of the important strengths beneath the surface of this great company – the strengths that tell its long-term growth story.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post Amazon's New Era With MGM appeared first on IAM Newswire.

Image by Ray Miller from Pixabay