The company behind “All of us are dead” and “Squid Game”

Korean dramas “All of us are dead” and "Squid Game" have been top discussion topics on social media, and many people have followed this drama, and they have also given high ratings recently.

Why are those shows so popular? A closer look reveals that the producer behind it is Netflix.

When it comes to Netflix, everyone will think of a series of high-quality film and television dramas, such as "House of Cards", "The Queen's Gambit", "Black Mirror" and so on, many of which have been nominated for several Oscars.

If someone goes in depth into Netflix's history, they will find that its current business model is completely different from the original one.

So what did Netflix do in the first place? What exactly does it make money from?

01

Let’s take a brief look at how Netflix got its start.

Netflix first started as a DVD rental business. After the customer placed an order online, Netflix mailed the DVD to the customer's home.

This business model looks simple now, but in 1998, it was quite creative.

Because people at that time wanted to watch discs, they had to go to physical stores,  which was very inconvenient; and suddenly one fine day, they could rent discs without leaving home. Who could resist such a temptation?

Netflix's business is really hot. As its users continue to increase, Netflix has tried to launch a "monthly subscription" service, paying more than ten dollars a month and renting 4 movies at a time.

With the new model, Netflix's subscribers rose to 300,000, and the company's monthly revenue was several million dollars.

But we also know that with the advancement of technology, movies can also be seen on the Internet, and the DVD format has gradually been eliminated.

Netflix keenly observed this technological change and quickly transformed itself into an online video site. To put it bluntly, it is like an "online cinema", which buys film and television drama copyrights from film companies and puts them on the platform for users to watch.

But this model still has its shortcomings. If the upstream price increases sharply, or the movie copyright is not sold to you, the business may collapse immediately.

After thinking about it, Netflix finally decided to produce its own content and attract users through self-produced film and television dramas. But the threshold for filming and TV drama is so high, how to go about it?

In 2013, Netflix launched its first self-made drama "House of Cards", which was well received. Since then, it has embarked on a "point of no return" for self-made dramas.

Therefore, from the earliest paid DVD rentals to the current paid to watch homemade dramas, it seems that Netflix's business has changed, but the essence of providing users the content they are interested in has not changed.

02

When we look at Netflix's stock price over the past ten years, we can see that its development momentum is indeed relatively strong:

You may want to ask, how does this company make money? 

The answer is membership fees.

At present, Netflix has more than 200 million subscribers, and the monthly fee is 8.99 US dollars, and the annual revenue is more than 20 billion US dollars.

The membership fees charged by Netflix are indeed not cheap. But many people are willing to pay this money, one is for its many high-quality original dramas, and the other is that there are no advertisements on Netflix.

When we dived into Netflix's annual report, we found out that Netflix's revenue are mainly from 2 sources , 99% is membership fee, and 1% is DVD service:

Therefore, there is a conflict between the membership service and the advertising business itself. Netflix simply gave up the advertising business and attracted users by continuously outputting high-quality content + good experience.

03

According to the latest annual report, Netflix's annual profit is 2.7 billion US dollars.

Netflix uses big data algorithms and in-depth mining of user data to tailor films that meet the audience's interests, it can mass-produce high-quality original dramas; however, domestic video platforms usually require good scripts to be popular and self-made. The quality of the show can't always be that stable.

Therefore, Netflix has long understood that a video platform can only make money if it has the mindset of pumping lots of money to continue to produce high-quality content. Being able to gain insight into the development direction of the industry so early is the most remarkable thing about this company.

Read also:

45.6 billion money game! What "Squid Game" teaches us … (spoilers alert)

45.6 billion money game! What "Squid Game" teaches us … (spoilers alert)

01

It took me two days to finish watching the hottest Korean drama "Squid Game" in Netflix.

There are only 9 episodes, the whole series is relatively short, and it can be watched within a day. It started with 456 players participating in six rounds of the game for the 45.6 billion won prize, and through elimination, there was a sole winner.

The weaknesses of human nature were fully exposed, and the contrast between good and evil makes people dwell deeper, thinking about life depicted In those childhood games.

And in this drama, we see the cruelty of debts giving an important blow to life, making people risk their lives for the sake of money.

02

What financial enlightenment does this drama give us?

1. At any time, don't develop the psychology of gambling

In the first episode, the protagonist is described as a person who is idle, loves to gamble, and lives off his mother. Because he loves to gamble, he is into of debts. His mother also has to share his burden of debts and not only that, he also secretly takes her pension money to bet on horses.

In order to raise money for his mother to perform surgery, as well as giving his daughter a decent birthday gift, he went to participate in the game, trying to change his destiny.

The majority of those 456 people have taken on huge debts and are unable to pay off their debts. They have no hope, so they come to participate in the squid game. They don’t know that an "opportunity" like this is equivalent to entering ‘hell’.

Getting rich overnight is like a dream. However, it comes with high risk. if they don’t choose to play the games, they will be chased by loan sharks. If they choose to play games, they will use their lives as the bet.

“According to the Bank of Korea’s data, the total household debt in South Korea exceeded 1800 trillion won in the second quarter of this year, a record high in a single quarter, an increase of 41.2 trillion won from the end of the previous quarter. In addition, South Korea’s household debt accounted for The GDP ratio has reached 105%."

In reality, many people have the psychology of gambling and will want put their money in speculation. The real investment is to do a lot of background work, accumulating money bit by bit through careful analysis.

Do not have any gambler psychology. Just one failure is sufficient to destroy you and your family. Do not use high leverage to trap yourself in a situation where you will never recover.

03

2. Reasonable budget and spending, don’t let excessive consumption overtake your life

Most participants are burdened by loads of debts. If you want to stop having debt, first review  your own income and expenditure.

When spending exceeds expectations, you must adjust, reduce unnecessary spending in the future, try not to spend future money, use as much as you earn, and face your own financial situation objectively.

When you already have debts, don't let it roll. The first task is to solve the debts, and then consider investment or other goals.

04

3. Never underestimate compound interest, persistence is ultimate victory

At the end of the game, the protagonist won a prize of 45.6 billion won.  He is almost a person who can make money while not having the need to work and let money do the compounding work. But the practice of compounding interest is long and painful, and this process will take ten, twenty, or even thirty years. You can't experience the happiness like winning the lottery which is immediate.

The world’s richest man Buffett once said, “It’s easy to decide one thing, and it’s also easy to give up halfway. The only way is persistence.”

Investment is a game in which everyone can participate in, but in the end, only a few people make money.

Why? Most people were eliminated by the market ruthlessly because they couldn't stand the torment of time and emotions.

Many plots of "Squid Game" are derived from reality. You think you are just a movie viewer, but in fact, you are already in the real "Squid Game".

Warren Buffet's 10 classic Ideas

Warren Buffet's Time management

Listen: Podcast