business news in context, analysis with attitude

CNet reports that Amazon is getting into a bidding war to acquire the Landmark Theatre chain from a group backed by billionaire Mark Cuban.

At its core, this represents yet another potential move by Amazon into the bricks-and-mortar world.

According to the story, “Purchasing a movie theater chain would represent a new component in the streaming giant's ambitions to become an entertainment giant. The e-commerce titan was expected to spend $4.5 billion on video-streaming content last year -- not far behind rival Netflix's $6 billion video budget.

“But while Netflix's business is streaming video, Amazon's is about selling a wide variety of topics, including shampoo, cloud services and its own smart speakers. By expanding its universe, Amazon hopes to draw consumers further into its ecosystem of devices, apps and other services, making it tougher to switch to a competitor.”

The story notes that “a chain of theaters dedicated to showing Amazon's original content could go a long way toward improving the company's reputation with the film industry. Netflix reportedly eyed making an offer for the Los Angeles-based chain, but backed off the idea because executives feared the purchased price would be too high.”
KC's View:
I’m a little confused by this, because there was a 1948 Supreme Court ruling that forced existing movie studios to sell the theaters they owned; that ruling said that such ownership violated antitrust laws, and allowed the studios to own too much of the film supply chain. This ruling, in fact, was against the kind of vertical integration that Amazon would be pursuing with such a purchase.

Now, to be clear, I’m not a lawyer, so there may be circumstances that make this decision irrelevant to such a move by Amazon.

I do think that just the fact that Amazon is considering a theater chain purchase reflects the degree to which it is willing to test how far it can move outside its traditional businesses and into the bricks-and-mortar world. These theaters even could have little Amazon Go-style stores that sell food products for consumption during the movie.