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)

Gotten HRW over the CNY break

Covid 19 seems to be quite distanced from me until my brother got positive on CNY eve, what a start to the long CNY break . Then we scrambled to read up on the everchanging protocol in order to know what to do next. After he was confirmed positive with the ART as well as the PCR test at the clinic near our house, the rest of the family members were issued with a health risk warning (HRW) one day after.

We self isolated and submitted the results of our ART results immediately after gotten the SMS to test within 24 hours. We were to test daily for 7 days and we can go about doing our normal activities if tested negative. We minimized going out, only going out to get the ART test kits and to get the daily necessities. 

The CNY this year was certainly quite memorable, toned down reunion dinner, strictly no house visiting, maybe the only optimistic part was that the other family members are still fine at the moment.

Till today, my brother is still tested positive. I guess living with Covid 19 will be the norm in Singapore especially with the spike in the cases in this few days. 

Take good care, stay safe and be responsible, Cheers everyone.

How to plan Asset allocations for various life stages

 

As the saying goes: "Money is earned, not saved." It actually means that we need to earn AND manage money in order to grow it. Only when we have a clear financial management goal, can we better understand what kind of investment tools we will need, making financial planning more effective.

But before that, we should have a clear understanding of our financial values ​​in order to better "prescribe the right medicine." In a broad picture, people born after 1980 can be divided into the following 6 categories according to their financial values:

①  1. Diligent Group: Choose to struggle first and then enjoy. Actively save, know how to increase income and reduce expenditure, live within their means, can quickly accumulate funds, and use funds for investment and financial management.

②  2. Enjoy First Group: Enjoy first and then struggle, focus on the immediate enjoyment of life, have strong purchasing power and consumption power, spend as much as they earn, and basically have no savings.

③  3. The hard-working Group: In the initial stage, the main goal is to purchase real estate. In addition to the long-term pressure of housing loans, they also need to prepare for their children's education expenses.

④  4. Dink Group: Pay attention to personal development, do not have children after marriage, and prefer to live in the two-person world. It should be noted that when one of the parties has an accident or financial risk, it is easy to trigger a marital crisis.

⑤  5. Non-married Group: Although there is no huge financial demand-buying real estate or preparing children's education funds, one should understand the indisputable fact that one will eventually grow old.

⑥  6. NEET (Not in Employment, Education or Training) Group: One is mostly at home, does not start a business or work, and the living expenses are all provided by the parents. In addition to consuming social resources, it is also easy to cause adverse effects on society.

Specifically, the life cycle of a family can be roughly divided into four stages: the "formation period" from being single to the establishment of a family; the "growth period" when children grow up; the "maturity period" when the family and career develop together; and from retirement to the end-of-life "ageing period".

The following focuses on the three stages of "formation period", "growth period" and "maturity period", and provide corresponding asset allocation suggestions. I hope it will be helpful to everyone.

Formation period: quickly accumulate wealth

Our life is not long nor short, the earlier you plan for financial management, the more wealth you can accumulate. We can start with the following 4 basic financial management steps:

1. Keeping track of income and expenditure: It allows you to understand your own consumption behaviors and habits, and can better control your future economic budget by sorting out whether each item of living expenses is reasonable.

2. Income: work hard and make money, set up a dedicated financial account for investment, and choose suitable financial products for investment.

3. Expenditure: living within your means and controlling shopping desires, such as coming up a shopping list before shopping and purchasing strictly in accordance to the list.

4. Value-addition: From the perspective of long-term interests, we will need to understand and improve professional ability. For example, to obtain various skills certificates to prepare for future promotion.

From the perspective of asset allocation:

Investment advisors used to recommend a rule of thumb where the investor will subtract their age from 100 to know the allocation for stocks in their portfolio. However due to the higher life expectancy, recommended formulae is to subtract your age from 110 or 120 to be more aggressive in stocks. The rest can be in less risky financial products such as bonds, ETFs, etc.

Growth period: emphasis on asset preservation and appreciation

The age of 30 to 50 is a period of heavy responsibility for life. This age needs to bear multiple financial pressures. Therefore, the proportion of investment in core assets can be adjusted appropriately.

From the perspective of asset allocation, planning can be made from the following four aspects:

1. Reserve a family fund: generally 6-12 months of family living expenses, in case of emergency.

2. Repay various types of loans: such as car loans, housing loans and general consumer loans.

3. Prepare children's education funds: to support children from kindergarten to university, the tuition and miscellaneous fees and various living expenses during this period will require a lot of money.

4. Retirement planning: The sooner you prepare for retirement planning, the less economic pressure you will bear.

Maturity period: Stay conservative and avoid risks

During the period from the age of 50 to critical retirement, our funds should be invested in more conservative or prudent financial products.

From the perspective of asset allocation, there is basically no income from work in the elderly after retirement, and they can only rely on CPF to pay for various expenses that may be faced, including necessary expenses for maintaining life, medical or nursing expenses, etc.

At this stage, good health is as important as wealth. Therefore, investment and financial management should prioritize "stability" and choose low-risk financial products, focusing on fixed income.

Do a good job in investment and financial management to achieve financial freedom

Financial management is lifetime homework. The greatest achievement of investment guru Warren Buffett when conducting financial management in stages, he always stays sober, adheres to medium and long-term investments, and follows the principle of asset allocation that is, investing in familiar ones. Only invest in what you are familiar with.

Read also:

The eight golden periods of financial management in life, have you missed them?

Listen: Podcast