Why Is Amazon in Entertainment?

Lots of people will write smart things about Amazon’s strategy with Metro-Goldwyn-Mayer, the movie studio that Amazon said it would purchase for $8.45 billion. But I want to ask a more basic question: Why?

Not why is Amazon buying MGM, which owns the rights to James Bond and “RoboCop.” Presumably, Amazon will use it to mine ideas for fresh series and movies for its Prime Video streaming entertainment service. No, I’m asking, Why does Amazon have a streaming video service at all?

On the rare occasions that Amazon executives have discussed their goals for Prime Video, they have focused on the power of loyalty. They say that including a video service in Prime is one more reason for people to stick with Amazon’s membership program and feel as if they’re getting good value from both package shipping at no added cost and “Bosch” on demand. My colleague Karen Weise reported that households with Prime memberships typically spend $3,000 a year on Amazon, more than twice as much as what households without the membership spend, according to Morgan Stanley.

Amazon has said that people who use Prime Video are more likely to renew their memberships each year or pay up if they’re on free trial programs, and they buy more products from Amazon. But in his new book about Amazon, the journalist and author Brad Stone suggests this might not be entirely true.

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