There has been a lot of talk about Amazon buying AMC, and to me it makes a lot of sense for both companies. At a high level, AMC gets a benefactor that has tremendously deep pockets, and is no longer at the mercy of the studios. With Amazon Originals, it has a vast new set of inventory to tap into. Amazon wins because this costs them practically nothing and they gain a captive audience that their media group can now offer up in addition to all of the other properties they already monetize.
- AMC is likely headed towards bankruptcy coming out of COVID-19 and Amazon will be able to buy them for a song. Attendance at theaters has been trending down for years, and with the pandemic, that trend is only going to accelerate.
- There has been very little innovation in the theatre space in the past 20 years or so, since high end audio became a standard feature. But with ticket prices pushing $15+, people go for nostalgia or a big blockbuster. For everything else, there’s Netflix.
- Streaming services such as Disney+, Prime Video and yes, Netflix are getting better and better. They are able to reach the long tail of the internet consumer, and have practically infinite inventory. They have become vertically integrated from creative to production to distribution.
- The real-time analytics from understanding exactly who is watching, when and what else they are watching give advertisers far more accurate information about where to place their advertisements. You can do far more precise targeting and messaging when the distributor also knows what you’re buying (ie: Amazon)
- AMC has a lot of fairly attractive real estate that Amazon could benefit from. Everything from Amazon lockers to returns and even Amazon Go shops could be setup in lobbies of AMC theaters, many of which have cavernous spaces that are otherwise wasted during the day.
In my mind, there’s not a whole lot of downside risk I see from either side. As Amazon’s media business grows in clout, it only makes sense to identify new ways to exert its market dominance with a unique set of assets that are being underutilized.