Chapter 341： Artisan Entertainment

Following the signing of the contract, Ronan signed a loan agreement with Bank of America on behalf of Netflix, using the rental and sale rights of these 18,500 film and television works as collateral, and loaned 27 million US dollars from Bank of America to pay the licensing fees of Hollywood Video.

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 video tape rental and sale, which means that all 18,500 films are in VHS format and cannot be used directly.

Embassy Pictures needs to convert the VHS format to DVD, and then contact a printing factory in the east to press DVDs in large quantities.

All of this requires money and needs to be included in the cost of Netflix, so Netflix will pay for it.

All subsidiaries of Relativity Entertainment have independent accounting.

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

However, the cost of printing in the East is very low. Anyone who knows the disc industry there knows that the cost of a single sheet is incredibly low.

Even if you include shipping costs and other costs, these discs cost only $1.50 each.

Popular videos will be printed more, and niche videos will be printed less. The audience of the film directly determines the amount of stock.

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

As the DVDs developed by Embassy Pictures were delivered to Netflix successively, the number of film and television works available for rent on Netflix's website soon exceeded 20,000.

Netflix has never been as confident as he is now.

At the very least, in terms of the number of works available for rent and sale, Netflix is ​​no worse than any film rental and sale company. The number of works for rent and sale owned by Blockbuster is only more than 20,000.

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

This also means that in terms of the quality of film and television works alone, Netflix cannot compare to Blockbuster, which mainly focuses on Hollywood works.

Ronan briefly looked through the list of 18,500 works. There are many familiar names in Hong Kong city movies, and there are also many bad movies.

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

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

Fortunately, these 18,500 works include almost all the mainstream films except the new films of the six major Hollywood companies in recent years, as well as the works of many medium-sized companies.

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

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 knows that these are far from enough. In the future, Netflix's transition to streaming media will require more film and television works or copyright authorization.

There is also great room for expansion.

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

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

As I said to Ronan before, Robert Iger enters the theory of relativity entertainment, first of all to understand and familiarize with the company, and his relatively gentle working style and mature and stable life, also let him integrate into the theory of relativity at the fastest speed. Entertainment.

Robert Iger is responsible for the company's daily operations. Ronan's work is still focused on Netflix, and now it is an extremely critical period for Netflix.

With Ronan’s support, Netflix worked with Shahai Entertainment and Embassy Pictures to formulate a detailed promotion plan. After several market surveys and analyses, Netflix’s management team, including Mark Randolph, also determined this year’s goals.

"Netflix achieved 500,000 paying users and positive cash flow in 2001!"

At Netflix’s annual meeting, Mark Randolph announced this goal.

Everyone, including Ronan, knows very well that according to the conclusions drawn from market surveys, the socio-economic environment has been gradually improving since 2002, which is also conducive to the development of Netflix.

According to a combination of data obtained from various sources, as of early February 2002, approximately 60% of American households—mostly high-income and middle-income earners—have a computer, of which more than 90% There is internet access.

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

But if Netflix wants to succeed, there are still quite a few difficulties.

Netflix’s marketing data shows that Netflix is ​​still not online with ordinary Americans-more than 70% of users are young men with better computer skills than ordinary people, as well as middle and high-income earners engaged in computer or Internet-related industries. .

To truly develop, Netflix must expand its appeal to mainstream customers.

There is no doubt that mainstream users today are still renting movies in physical stores such as Blockbuster and Hollywood Films.

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

The scale of Netflix's promotion continues to expand. Promotional advertisements have appeared on TV stations, magazines, newspapers, and portal websites one after another. Netflix's placement advertisements will also appear on several films that Shahai Entertainment is shooting with suitable backgrounds.

"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 4, Netflix's commercial appeared on the midfield commercial show.

This is the number one program in the U.S. 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, among which the number of paid rental users exceeded 70,000.

These are just the beginning, the promotion of Netflix will continue for a long time.

For example, under the contact of Relativity Entertainment, Netflix got an advertisement for the 74th Academy Awards in 2002.

There will be Netflix placement ads in films such as "The Bournemouth 2", "Reaper is Coming 2", "Hurricane Rescue" and "Summer of Jeans".

Ronan has been working with his senior managers and believes that they can achieve the common goal of developing Netflix in their own way.

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

This is an extremely creative time, where employees and managers can communicate freely.

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

During this period of time, Ronan and Mark Randolph negotiated with Hollywood Video again to reach a cross-promotion cooperation.

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

Hollywood Video did not hesitate to reject Netflix, believing that Netflix’s model could not be successful, even in the eyes of this superstitious video tape company, DVD is not important.

Because Hollywood Video still sold 11.3 million boxes of video tapes in 2001, and almost all of their chain store inventory was video tapes.

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

This is Ronan's new office, also located on Burbank Thirteenth Street, not very far from Shahai Entertainment. He officially moved here to work, along with three assistants headed by Connie.

Robert Iger smiled and asked, "What's the matter?"

Ronan shook his head and said, "Netflix no longer has to have illusions in the film and television rental industry. We have to solve the company's financial and customer problems by ourselves."

Robert Iger recalled the performance of Next Netflix in the last month of last year and the first month of this year, and said: "Netflix is ​​on the right track. Based on the current customer flow and payment ratio, I made an analysis. Netflix It may be profitable in the second quarter of this year."

"Really?" Ronan was not sure.

Robert Iger handed an analysis report to Ronan: "This is the conclusion I reached based on data analysis."

Ronan took it and turned it over and said, "You are so efficient."

Robert Iger has just joined the Relativity Entertainment for just over a week.

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

Ronan said directly: "At present, the company's capital chain is tight, and there is no power for the time being to obtain copyrights on a large scale. We will look at the profitability of these films this year."

Robert Iger said: "If the profit is substantial, I suggest putting the film library plan on the agenda." He looked at Ronan: "It is not Netflix's film library, but the film library of Relativity Entertainment."

"I also want to have a huge film library that really belongs to Relativity Entertainment." Ronan knew that this was the real confidence and strength of the film company, and asked: "Bob, where do you think we should look for the film library?"

Robert Iger said directly: "Artisan Entertainment! They own the copyright of more than 5,000 movies due to platform limitations, they cannot maximize the benefits of copyright."

Ronan thought for a while and said, "Bob, you have prepared a complete 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 Only after this can a decision be made."

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

Robert Iger nodded: "No problem."

Ronan discussed a few more words with him, 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."

"Remember." Robert Iger said: "I won't miss the first film after joining Relativity Entertainment."

This game-based movie, which was overwhelmed by the September 11 attacks, has been announced since the beginning of the year in preparation for its release.