With the signing of the contract, Ronan signed a loan agreement with Bank of America on behalf of Netflix, using the lease and sale rights of these 18,500 film and television works as collateral, and borrowed $27 million from Bank of America to pay for the licensing fees of Hollywood Video.

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

Whether it is a chain store or an Internet website, Ruiou's business has always been the rental and sale of videotapes, which means that these 18,500 films are all in VHS format and cannot be used directly.

Embassy Pictures needed to convert VHS format to DVD, and then contact printing factories as far away as the East to suppress the DVDs in large quantities.

All of this requires money and needs to be included in Netflix's costs, so Netflix will naturally pay for it.

The finances of each subsidiary of Relativity Entertainment are all accounted for independently.

According to Netflix's estimates, about 1.5 million DVDs will need to be printed for these 18,500 films.

However, the cost of printing in the East is very low, and those who have known about the disc industry there know very well that the cost of a single sheet is incredibly low.

Even with shipping costs and many other costs, these discs cost only $1.5 each.

Popular films will be printed more, niche films will be printed less, and the audience range 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's transition to streaming.

With the successive delivery of the DVD printed by Embassy Pictures to Netflix, the number of films and television works available for rent and sale on Netflix's website soon exceeded 20,000.

Netflix has never been more emboldened than it is now.

At least in terms of the number of works that can be rented and sold, Netflix is no worse than any film and television rental and sales company, and the number of rental and sales works owned by Pepsi is only more than 20,000.

Of course, among the 18,500 new works owned by Netflix, the proportion of overseas film and television rights far exceeds that of Pepsi, of which the number of Hong Kong City movies accounts for a considerable proportion.

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

Ronan simply looked through the list of 18,500 works, and there were many familiar names in the Hong Kong City movies, as well as many bad movies.

Compared with the slow Hollywood, Hong Kong film making has always been known for its speed, and many famous films claim to take only one month from the beginning of 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 mainstream films except for the new films of the six major Hollywood companies in recent years, and there are 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 needs to do is attract more customers.

Netflix's focus has shifted to this area as well.

But Ronan knows very well that these are far from enough, and in the future, Netflix's transformation to streaming media will require more film and television works or copyright authorization.

There's also plenty of room for expansion.

Copyrights to new studios like DreamWorks and Lionsgate, as well as thousands of films in the hands of Artisan Entertainment, are the next steps.

During this period, Robert Iger left Walt Disney and officially joined Relativity Entertainment as CEO, and Ronan convened a management meeting to introduce Robert Iger to the management of Relativity Entertainment and three subsidiaries.

As I said to Ronan before, Robert Iger entered Relativity Entertainment first to understand and be familiar with the company, and his relatively gentle work style and mature and steady conduct in the world also allowed him to integrate into Relativity Entertainment as quickly as possible.

The day-to-day operations of the company are handled by Robert Iger, and Ronan's focus is still on Netflix, which is now an extremely critical time for Netflix.

With Ronan's support, Netflix has worked with Shahai Entertainment and Embassy Pictures to develop a detailed promotion plan, and Mark Randolph and other Netflix management have also set their goals for this year after several market research and analysis.

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

At Netflix's annual conference, Mark Randolph announced the goal.

Everyone including Ronan is well aware that, according to the conclusions of market research, the socio-economic environment has gradually improved since 2002, which is also conducive to the development of Netflix.

As of early February 2002, about 60 percent of American households — mostly high- and middle-income — owned a computer, and more than 90 percent of them had Internet access, according to a combination of data available.

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

But if Netflix wants to succeed, it still faces considerable difficulties.

Netflix's marketing data shows that Netflix still hasn't connected to the average American — more than 70 percent of its users are young men with better computer skills than the average person, as well as middle- and high-income earners working in computer- or Internet-related industries.

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

There's no doubt that today's mainstream users still rent films from brick-and-mortar stores like Peskind and Hollywood Movies & Television.

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

The scale of Netflix's publicity continues to expand, with promotional advertisements appearing on TV stations, magazines, newspapers and portals, and Netflix's product placement ads will also appear on several films with suitable backgrounds being filmed by Shahai Entertainment.

"Resident Evil" is about to be released, and Netflix has also appeared as a background advertiser in many media promotion activities.

At the Super Bowl on February 4, a Netflix commercial appeared on the halftime advertising show.

This is the first program in the United States to dominate the ratings for many years, and no film and television work or sports variety show can match it.

In just one week after the Super Bowl, Netflix exploded by nearly 100,000 registered users, including more than 70,000 paid rental users.

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

For example, under the connection of Relativity Entertainment, Netflix got the 74th Academy Awards in 2002 to insert an advertisement.

In films such as "Spy 2", "Death is Coming 2", "Hurricane Rescue" and "Summer of Jeans", there will be product placement ads for Netflix.

Ronan has been working with his senior managers and believes they can achieve their shared goal of growing Netflix in their own way.

At work, Ronan does not play the role of dictating to his subordinates, preferring to set the direction and tone for the company.

It's an extremely creative time, and there is no inhibited communication between employees and managers.

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

During this time, Ronan and Mark Randolph had another meeting with Hollywood Video to reach a cross-promotion collaboration.

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

Hollywood Video did not hesitate to reject Netflix, believing that Netflix's model could not succeed, and even in the eyes of this superstitious video tape company, DVDs are not important.

Because Hollywood Video still sold 11.3 million cassettes in 2001, and almost all of their chain's inventory was videotapes.

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 to this office, along with three assistants led by Connie.

Robert Iger smiled and asked, "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 capital and customer problems." ”

Reflecting on Netflix's performance in the last month of last year and the first month of this year, Robert Iger said: "Netflix is on the right track, and based on the current customer flow and payment ratio, I did an analysis that Netflix is very likely to be profitable in the second quarter of this year. ”

"Really?" Ronan wasn't sure.

Robert Iger handed Ronan an analysis report: "That's what I came to based on data analysis. ”

Ronan took it and looked at it and said, "You're so efficient. ”

Robert Iger has only been on board with Relativity Entertainment for just over a week.

"It's my job. Robert Iger said with a smile: "I think if Netflix wants to develop further, it must continue to expand its film library. ”

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

Robert Iger said: "If it's profitable, I recommend putting the library plan on the agenda. He looked at Ronan: "It's not Netflix's library, it's Relativity Entertainment's library." ”

"I also wanted to have a huge library of films that really belonged to Relativity Entertainment. Ronan knew that this was the real strength and strength of the studio, and asked, "Bob, where do you think we should find the library?"

Robert Iger said directly: "Craftsman Entertainment, they have the rights to more than 5,000 films, but they can't maximize the copyright benefits due to the limitations of the platform. ”

Ronan thought for a moment and said, "Bob, you prepare a perfect report. Well...... You communicate with Robert Lee, from now on, pay more attention to the dynamics of Artisan Entertainment and collect relevant information, I need to read these before I can make a decision. ”

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 of the year, don't forget to go to the premiere. ”

"I remember. Robert Iger said, "I can't miss my first film after joining Relativity Entertainment. ”

This game-based film, which was overwhelmed by the 911 attacks and released this year, has been stepping up publicity and preparation for its release since the beginning of the year.