The streaming wars are heating up. Amazon (AMZN) revealed on Wednesday morning that it will obtain privately-held MGM (the movie studio, not the casino) and its iconic lion roar for $8.45 bln. This was AMZN’s second-biggest acquisition ever, behind Whole Foods a few years ago, so it’s a big deal. The acquisition was not a complete surprise as the WSJ had been reporting over the past few days that a deal was imminent, but now it’s official.What does this deal mean for the streaming world?Amazon’s Prime Video offering will add a lot of content given that Metro Goldwyn Mayer is a massive studio in Hollywood and has been around a long time. Its vast library contains 4,000+ films, including James Bond, Legally Blonde, Creed, Rocky, Thelma & Louise, etc. It also includes 17,000 TV shows, including The Handmaid’s Tale, Fargo, and Vikings.We do not think it’s a coincidence that this deal was revealed so soon after AT&T (T) revealed it would merge its WarnerMedia assets, including HBO Max, with Discovery’s (DISCA) entertainment and sports businesses to create a huge streaming service as an independent company to compete stronger with Netflix (NFLX) and Disney+ (DIS). The message is clear: build huge amounts of content.The deal could also be a realization by Amazon that it will not be able to produce enough content on its own quickly enough to compete efficiently. It does not wish to be left behind by its streaming rivals.This deal along with the AT&T/Discovery deal indicates that Netflix’s recent stumbles on its net sub-add growth are not a long-term concern regarding the market saturation. The long-term dynamics for streaming look amazing and these deals indicate that big media companies agree.Whenever AMZN gets involved, you better watch out. What is interesting is that when Amazon initiated its Amazon Restaurants, investors rightly feared the impact that would have on GrubHub (GRUB), DoorDash (DASH), and others. However, AMZN did not seem to subsequently push into that space violently, probably because it saw that it was highly saturated and very aggressive regarding pricing. We see the MGM deal as AMZN turning up the heat on streaming and it’s an indication that it plans to battle this market. We would not be surprised to see Amazon make other deals and increase spending on content production.