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How the Big Tech Monopoly Is Killing Cinema

Amazon's buyout of MGM is the latest example of the culture industry's transformation into a big tech monopoly game – while artists, workers, and the film-watching public suffer the consequences.

Throughout the pandemic, there’s been speculation about when companies like Netflix or Amazon would take advantage of the media industry’s struggles to expand their own businesses. Much of that discourse focused on cinemas and whether they would buy up one of the ailing theatre chains, but in fact, the first major acquisition to come out of the period is a prominent studio.

On 26 May, Amazon announced it would buy MGM Studios for $8.45 billion. The purchase of the storied Hollywood film studio is aimed at shoring up the position of Prime Video as its competitors expand their streaming platforms, but it also signals a worrying development in the consolidation of the entertainment industry.

Much of the coverage of the sale has focused on what it will mean for Amazon’s streaming business: how MGM’s back catalogue will bolster Prime Video’s streaming offerings and provide plenty of intellectual property to mine for future series. Outgoing CEO Jeff Bezos even said the purchase was attractive because ‘MGM has a vast, deep catalog of much-loved intellectual property’ that Amazon can ‘reimagine and develop… for the twenty-first century.’

Those statements are reflective of how important recognisable intellectual property has become to the modern film and television industry, but it tells us nothing about what benefit workers and the public can expect from this merger. The truth is that the discourse around cultural industries has shifted almost entirely to reflect the interests of the media oligopoly, and the consolidation of those industries is fundamentally eroding the quality of work and cultural output as corporations are able to further exert their power.

Pressure to Consolidate

In the United States, media consolidation has been escalating for much of the past decade. In 2009, Comcast bought NBCUniversal and Disney began its transformation into the juggernaut it is today with the purchase of Marvel for $4 billion. In 2012, it also purchased Lucasfilm for a similar amount, seizing the other tentpole piece of the intellectual property driving its present-day dominance of the box office: Star Wars.

But during that time, there was another important change that only incentivised the trend toward consolidation. Netflix’s transformation from a DVD rental business to a streaming platform, and particularly its entry into film and television production in 2013, represented the entry of tech capital into the media business. Tech companies have much easier access to capital than incumbent media companies because investors believe they will deliver greater returns, creating a pressure for them to consolidate as Amazon, Apple, and others entered the fray.

The competition presented by tech companies also started transforming the business model of the industry. As streaming companies sought out media for their platforms, the cost of content acquisition rose because they had such deep pockets, forcing the existing media companies to match their prices. At the same time, the streaming model started to hollow out the long tail of revenue. Instead of putting a film in cinemas or a show on television, then selling physical copies and various broadcast and foreign rights over the years that followed, the media instead sat in the streaming catalogue in perpetuity.

These trends served to accelerate the pace of consolidation. In 2016, AT&T made a major acquisition of Time Warner for $85 billion, bringing Warner Brothers and HBO under its control, and CBS and Viacom also merged. Then, in 2018, Disney bought 21st Century Fox for $71 billion, effectively taking one of its major competitors out of the picture. It’s hard not to understate how significant that move was, and how it affected the industry.

Pseudonymous essayist Film Crit Hulk compares Disney’s purchase of Fox to what would happen if Coca-Cola bought Pepsi. ‘It bought its rival, stripped for necessary parts, kept a few valuable brands, took the library and dismantled everything else,’ writes the critic. ‘And just like that, suddenly 1/6 of the industry was gone.’ Despite its growth, Disney was actually making fewer films a year before the Fox acquisition than it did in the 1990s, and it will not be maintaining the same output as Fox used to produce. As the number of projects falls and the power of the companies increases, that also affects labour.

Eroding the Power of Unions

In the early years of the streaming wars, the platforms were treated as though they were ushering in a new era of creativity as they sought to land major productions with recognisable talent both in front of and behind the camera to attract new subscribers. They were also handing out money to people who may have usually struggled to finance their projects, allowing a degree of experimentation that was attractive to people who wanted something different. But that wouldn’t last forever.

In 2019, streaming analyst Eric Schiffer said we were already exiting ‘the golden age of streaming’ as those more niche series started finding it much harder to survive. Netflix’s decisions over what shows to renew were determined by an opaque algorithm that ultimately led to the disproportionate cancellation of series made by women. At the same time, series on Netflix found it hard to make it past the second or third season, which is typically when bonuses and salary increases are awarded. All of this affects labour.

The most prominent actors and directors will be fine as their names are in high demand in our celebrity- and influencer-driven culture of consumption, but the people who work on set and do the jobs in the small print deep into the film credits won’t have it so easy. The film industry is a rare sector where unions remain strong, but in the same way that tech companies have taken on worker power in other areas, the trends they’re fuelling in the industry include taking on the unions.

The unions fought for ‘the most basic protections and assurances in an industry absolutely defined by its temporary gig-ness,’ writes Film Crit Hulk. But the essayist explains that, similar to gig companies using Proposition 22 in California to deny gig workers their rights, the tech giants and consolidated media companies vying for streaming dominance are also chipping away at the protections of workers. Tech companies like Netflix, in particular, have not had to use union labour, and workers’ cut of the long tail as media is rebroadcast and various rights are resold became worthless in the streaming era.

When it comes to craftspeople, young writers, and other jobs on set you might not know about, Film Crit Hulk writes that ‘the rates for these jobs when looked at across the board? They are so much lower and people are just so happy to simply be getting work,’ making it harder to be financially stable as people jump from one job to the next – if they can reliably find them. Workers and their unions are still fighting, and producers recently formed their own union to push for better terms, but these changes to the way media is produced do not just have consequences for workers. They also alter the kind of film and television available for us to watch.

Altering the Cultural Output

The composition of the industry has always played a role in shaping what was produced. In the 1940s, the US Justice Department enforced antitrust laws against the major film studios resulting in the Paramount Decrees that limited studios’ control over distribution, and led to an explosion of independent production in the decades that followed.

Similarly, in the 1970s, the US government implemented the financial syndication and interest or ‘fin-syn’ rules, which strictly regulated what ABC, CBS, and NBC—the three major broadcasters at the time—could show in primetime. Those restrictions allowed independent production to flourish as the power of the oligopoly was reined in.

Once again, we find ourselves in a period where an oligopoly is exerting its power over the film and television industry. Disney strictly controls both its catalogue and that of the former 21st Century Fox, limiting cinemas’ ability to show classic films. It uses its dominance of the box office through its Marvel and Star Wars properties to push increasingly punitive terms on cinemas. But it’s also prompted a shift in the media that gets produced.

Disney has been a pioneer in shifting to a model focused on blockbusters that make use of existing intellectual property designed to appeal to the largest possible global audience, whether Marvel, Star Wars, its classic franchises, and some of the other IP it’s acquired over the years. It then uses those tentpole films to drive viewers into spinoff shows and miniseries that were once on television networks—not to mention its theme parks and cruises—but are increasingly available exclusively through its own streaming platform.

Netflix, Amazon, and other major players are trying to emulate that strategy, as evidenced by Bezos’ comments about MGM’s intellectual property. Amazon has invested nearly half a billion dollars just for the first season of its television series set in the world of J.R.R. Tolkien’s The Lord of the Rings in an attempt to make its own Game of Thrones, and it seeks to make use of MGM’s IP to develop similarly recognisable media to draw people in. Originality is harder to sell, and thus is becoming more difficult to get one of these major companies to take a risk on.

Commenting on the merger, Nicholas Russell explained that the streaming wars and the consolidation it’s incentivised turns film and television into ‘commodities to be traded and hoarded in order to capture subscriptions,’ which leads to a ‘dilution of both quality and vitality for the cinematic form.’ While companies like Disney are producing fewer movies for cinema as they focus exclusively on blockbusters, they’re all developing a flood of content for their streaming platforms to keep people’s attention – but the quality of those programmes has notably declined.

A Worrying Precedent

It’s always difficult to recognise what isn’t there; what film and television isn’t being produced because markets are structured to incentivise something else. Independent film and television does still exist, but the IP-driven media landscape has little room for stories that do not fit within its existing brands. Criticism of the superhero, science fiction, and fairy tale blockbusters also prompts anger from those who are comforted by the nostalgia of dumbing down every story to a child’s level and refracting them through recognisable IP.

It remains to be seen what will come of the Amazon-MGM merger, but it sets a worrying precedent on the level of the Disney-Fox merger. One of the dominant tech companies has consumed a Hollywood studio to serve its broader monopolistic goals, and the most many commentators can do is wonder whether they’ll get some new shows on Prime Video.

It’s time for competition authorities to expand their attention to the media oligopoly and act quickly to bring in new regulations that achieve similar outcomes the Paramount Decrees or fin-syn rules. The value of IP to these media giants also shows the need to dismantle the excessive copyright protections on these properties to force companies to invest in something new.

But film and television should not be left to the private sector, and that sector’s failure shows the need for a public platform to invest in the kind of productions that depict the lives of people who aren’t wealthy, and that make people think critically about the world in which we live. Amazon, of course, has no incentive to do that.