The Best Entertainment Era

With the signing of the contract, Ronan signed a loan agreement with Bank of America on behalf of Netflix, using the lease and sales copyright of 18,500 film and television works as collateral, and borrowed 27 million US dollars from Bank of America to pay the licensing fees of Hollywood Video Company.

In addition, Netflix placed a related order with Embassy Pictures in arrears of US$10 million.

Regardless of whether it is a chain store or an Internet website, Ruiou's business has always been the rental and sale of video tapes. That is to say, the 18,500 films are all in VHS format and cannot be used directly.

Embassy Pictures needs to convert the VHS format to DVD, and then contact the processing factories far in the east to press DVDs in large quantities.

All of these need money and need to be included in the cost of Netflix, so naturally Netflix will pay for it.

All subsidiaries under Relativity Entertainment have independent financial accounting.

According to Netflix's estimate, these 18,500 films will probably require 1.5 million DVD discs to be printed.

But the cost of printing in the East is very low, and anyone who has experience with the disc industry there knows that the cost of a single sheet is unbelievably low.

Even including shipping and many other costs, each of these discs costs only $1.50.

More popular movies will be printed, and less popular movies will be printed. The audience range of the movie directly determines the amount of stock.

And after the transaction is completed, there is no need to worry about the Internet playback copyright of these films after Netflix transitions to streaming media.

As the DVDs developed by the embassy film industry were delivered to Netflix one after another, the number of film and television works available for rent and sale on the Netflix website soon exceeded 20,000.

Netflix has never been more emboldened than it is now.

At least in terms of the number of rental and sales works, Netflix is ​​no worse than any other film and television rental and sales company, and Blockbuster owns only more than 20,000 rental and sales works.

Of course, among the 18,500 works newly owned by Netflix, the proportion of overseas film and television copyrights far exceeds that of Blockbuster, and the number of Hong Kong movies occupies a considerable proportion.

This also means that in terms of the quality of film and television works alone, Netflix is ​​not as good as Blockbuster, which mainly focuses on Hollywood works.

Ronan simply looked through the list of 18,500 works,

There are many familiar names in Hong Kong movies, but there are also many bad ones.

Compared with the slow Hollywood, Hong Kong film production has always been known for its speed. Many famous films claim that it only takes one month from the start of filming to the release.

The quality problem of the film library needs to be solved step by step.

Fortunately, these 18,500 works include almost all mainstream films except for the new films of the six major Hollywood companies in recent years, and there are also many works of medium-sized companies.

This is enough to support the large-scale development of Netflix's business.

In a short period of time, what Netflix has to do is to attract more customers.

The focus of Netflix's work has also shifted to this aspect.

But Ronan is very clear that these are far from enough. In the future, Netflix will need more film and television works or copyright authorization to transform to streaming media.

There is also a lot of room for expansion.

The rights to the works of newly established film companies such as DreamWorks and Lionsgate, as well as the thousands of films in the hands of Artisan Entertainment, are the next steps.

During this period, Robert Iger resigned from Walt Disney and officially joined Relativity Entertainment as the executive president. Ronan convened a management meeting and introduced Robert Iger to the management of Relativity Entertainment and the three subsidiaries.

As I said to Ronan before, when Robert Iger entered Relativity Entertainment, he first got to know and familiarize himself with the company, and his relatively gentle work style and mature and stable behavior also allowed him to integrate into Relativity as quickly as possible. Entertainment.

Robert Iger is in charge of the company's daily operations, and Ronan's focus is still on Netflix. Now is an extremely critical period for Netflix.

With the support of Ronan, Netflix, together with Shahai Entertainment and Embassy Pictures, formulated a detailed promotional plan. Mark Randolph and other managers of Netflix also determined the goals for this year after several market surveys and analysis.

Netflix achieved 500,000 paid subscribers and positive cash flow in 2001!

Mark Randolph announced the goal at Netflix's annual meeting.

Everyone, including Ronan, is very clear that according to the conclusions drawn from market research, since 2002, the social and economic environment has gradually improved, which is also conducive to the development of Netflix.

According to comprehensive data obtained from various sources, as of the beginning of February 2002, about 60 percent of American households—mostly high-income and middle-income earners—own a computer, and more than 90 percent of them There is internet access.

In addition, total sales of DVD players in the United States exceeded 15 million units.

However, if Netflix wants to succeed, it still faces many difficulties.

Netflix’s marketing data shows that Netflix is ​​still not on the line with ordinary Americans—more than 70 percent of users are young men with superior computer skills, and middle-to-high-income earners in computer- or Internet-related industries .

To really take off, Netflix must broaden its appeal to mainstream customers.

There is no doubt that today's mainstream users still rent movies in brick-and-mortar stores such as Blockbuster and Hollywood Films.

By the end of January 2002, the number of registered users of Netflix had risen to 300,000, while Blockbuster had 50 million registered users and more than 20 million active users.

The scale of Netflix’s publicity continues to expand, and promotional advertisements appear on TV stations, magazines, newspapers, and portal websites one after another. Several films with suitable backgrounds that Shahai Entertainment is shooting will also have Netflix’s embedded advertisements.

Resident Evil will be released soon, and Netflix has also appeared as a background advertiser in many media promotion activities.

In the Super Bowl on February 4th, a Netflix ad appeared on the halftime ad show.

This is the program that has occupied the number one ratings in the United States over the years, and no film and television works or sports variety shows can match it.

In just one week after the end of the Super Bowl, Netflix surged nearly 100,000 registered users, of which more than 70,000 paid rental users.

These are just the beginning, and the hype promoting Netflix will go on for a long time.

For example, under the connection of Relativity Entertainment, Netflix won the 74th Academy Awards in 2002 to insert advertisements.

In movies like Bourne Bourne 2, Reaper 2, Taken and Summer of Jeans, there will be Netflix placement ads.

Ronan has been working with his senior managers and believes they can find their way to the shared goal of growing Netflix.

At work, Ronan will not play the role of bossing his subordinates, but is more willing to set the direction and tone for the company.

This is an extremely creative time, with unfettered communication between employees and managers.

After Netflix injected capital and got enough film sources, it was full of motivation and vitality. Everyone in the company believed that Netflix would succeed.

During this time, Ronan and Marc Randolph had yet another meeting with Hollywood Video about reaching a cross-promotional partnership.

But unlike the previous one, this time the two sides did not negotiate any results.

Hollywood Video rejected Netflix without hesitation, thinking that Netflix's model could not succeed, and even in the eyes of this superstitious videotape company, DVDs were not important.

Because Hollywood Video still sold 11.3 million videotapes in 2001, and their chain store inventory is almost all videotapes.

In the brand-new office of Relativity Entertainment, Ronan said to Robert Iger sitting next to him: These rejections made me realize one thing.

This is Ronan's new office, which is also located on Thirteenth Street in Burbank, not far from Shahai Entertainment. He officially moved here to work, and three assistants headed by Connie followed him.

Robert Iger asked with a smile, What's the matter?

Ronan shook his head and said, Netflix no longer needs to have illusions about its peers in the film and television rental and sales industry. We have to rely on ourselves to solve the company's funding and customer problems.

Robert Iger recalled Netflix's performance in the last month of last year and the first month of this year, and said: Netflix is ​​on the right track. According to the current customer flow and payment ratio, I did an analysis. Netflix is ​​extremely It is possible to be profitable in the second quarter of this year.

Really? Ronan was not sure.

Robert Iger handed an analysis report to Ronan: This is my conclusion based on data analysis.

Ronan took it and looked it over, and said, You are really efficient.

Robert Iger joined Relativity Entertainment just over a week ago.

This is my job. Robert Iger said with a smile: I think Netflix must continue to expand its film library if it wants to develop further.

Ronan said directly: Currently, the company's capital chain is tight, and we don't have the strength to obtain copyrights on a large scale for the time being. We need to see the profitability of these films this year.

Robert Iger said: If the profit is considerable, I suggest that the film library plan be put on the agenda. He looked at Ronan: Not Netflix's film library, but Relativity Entertainment's film library.

I also want to have a huge film library that truly belongs to Relativity Entertainment. Ronan knew that this is where the film company's real confidence and strength lies, and asked, Bob, where do you think we should find the film library?

Robert Iger said directly: Artisan Entertainment! They own the copyrights of more than 5,000 movies. Due to the limited platform, they cannot maximize the benefits of copyrights.

Ronan thought for a while and said, Bob, you prepare a comprehensive report. Um...you communicate with Robert Lee. From now on, pay more attention to the dynamics of Artisan Entertainment and collect relevant information. I need to see After that, a decision can be made.”

He smiled. If it works. Bob, I need you to do it.

Robert Iger nodded: No problem.

Ronan discussed with him a few more words, changed the subject, and said, Resident Evil is about to premiere. This is our first film this year. Don't forget to attend the premiere.

I remember, said Robert Iger. I don't miss my first film since joining Relativity Entertainment.

This game-adapted movie, which was overwhelmed by the 9/11 attacks, has been intensified since the beginning of the year to prepare for its release.