By the end of the month, if they don’t unsubscribe, the website will automatically charge users $15.99 per month, and various mainstream credit cards can be used to pay.

Two months after it was launched, Netflix has accumulated nearly 5,000 users. In a week of testing, 22% of users happily accepted the subscription model.

For the vast majority of users, the subscription model does solve their pain points in using Netflix.

To be precise, it is not only the pain points of using Netflix, but the pain points of all users facing the videotape rental industry.

In the new week, the number of users in the subscription model is still growing rapidly, and the influence continues to spread, and the overall number of users of the website is also rising rapidly.

Netflix had to purchase a large number of DVD video tapes for this reason. It cost 800,000 US dollars to purchase video tapes in just one week, and the website's money-burning speed suddenly increased.

At this moment, Netflix made another amazing promotional decision.

"Netfei invites you to watch a movie!"

The promotional name sounds ordinary, but the content is attractive.

As long as users are willing to pay one year's subscription fee in advance, they can receive a free DVD player set produced by Sony.

After years of popularization, traditional VHS recorders have generally been under $200. This year marks the first year of DVD players being launched.

Players produced by manufacturers such as Sony, Toshiba, Philips have been launched one after another in recent months, with prices ranging from $500 to $600.

The relatively high price has not caused the DVD player to be too big in the initial stage of its launch, but is sold in an orderly manner.

In the three months since its launch in the North American market, the cumulative sales of DVDs by several manufacturers were only 146,000 units.

DVD players are priced between $500 and $600, and how much does Netflix spend a year subscription?

$15.99*12, which is approximately equal to $192.

Elementary school students can understand that Netflix's wave of marketing is no different from giving users a few hundred dollars.

On the day the event was posted on the homepage of the website, Netflix's website's views soared by 350%, directly attracting 1,240 annual subscribers.

The next day, the website views increased by 210% again on the basis of the previous day, and the annual subscription users increased to 2,560. Netflix's marketing campaign has spread throughout Silicon Valley.

On the third day, Mark Randolph was interviewed by the Wall Street Journal.

"One year ago, we keenly discovered an opportunity: we can build an important commercial brand in a market worth tens of billions of dollars to promote the further development of DVD, the fastest growing consumer electronics product.

Three months ago, Netflix opened the world's first Internet DVD rental store: NetFIi.com. We have the world's most complete DVD movie reserves, all of which are available for rent.

Three days ago, Netflix fulfilled his promise. We invited every friend who loves movies with 100% sincerity, welcomed them to participate in this revolution adapting the habit of popular movie viewing.

The Wall Street Journal interview report titled "Change Hollywood? Or Change the World?" made Mark Randolph's name resound throughout the American business world overnight.

In the century-old business history of the United States, various marketing models have emerged one after another, exhausted ingenuity.

Netflix's promotions are far from being unique, but they shocked everyone with their "richness" that hits the face.

Your website’s subscription fee is less than 200 US dollars a year, so you dare to give a player of 500 US dollars? Who gave you the courage?

Of course, everyone is not sure what price the players Netflix offers are purchased at, but even if the purchase price is lower, it is not as low as Netflix's annual subscription fee.

Netflix always loses money when doing this.

Rumors in the business world have always spread quickly, and someone soon found out the specific news.

It is said that the purchase price of the DVD player used for Netflix promotion is US$300 per unit, which means that in this event, Netflix invested $108 in marketing costs per subscriber.

Not only that, if you include the promotional cost, DVD rental cost, mailing cost, labor and other support, the cost of Netflix to obtain a long-term subscription customer may be as high as $150.

Since its birth, the US Internet industry has been accompanied by "burning money", but it is rare to burn money like Netflix at any cost.

Especially Netflix is ​​just a startup company, and it is crazy to dare to burn money like this.

But everyone has to admit that although Netflix's move is simple and crude, it has achieved miraculous results in a short period of time, which not only allowed Netflix to make the American business community in just a few days, but also left a large number of users for the website.

One week after Netflix's website views surged by 3250%, firmly in Point

The top ten popular websites in Communications are the top 10.

The order volume soared from the original 200 to 300 orders per week to 7,500 orders per week. In order to cope with the sudden surge in orders, Netflix had to temporarily hire 15 employees who were specifically responsible for packaging and out of the warehouse.

In terms of subscription users, Netflix's monthly subscription users reached 14,500 in one week, and 3,750 annual subscription users reached 3,750.

This means that Netflix will send out 3,750 DVD players. For this fee alone, Netflix will support more than one million US dollars.

In addition to the surge in subscription users, Netflix will also need to continue to purchase large quantities of DVD video tapes. Investors who follow Netflix estimate that Netflix will burn at least $2 million in just one week.

Such crazy money-burning marketing made many investors feel chill, but also made them see a possibility.

Netflix's marketing method looks rough, but when you savor it carefully, it hides a deep understanding of business operations and human nature.

Users feel that they have taken advantage of Netflix and are eager to get to this marketing activity. In fact, Netflix spends much less than what they see on the surface.

Don’t forget that every user who applies for an annual subscription pays Netflix a subscription fee of US$192. Netflix purchases DVD players and cannot pay the entire payment in one go. This money is enough to cover Netflix’s marketing costs in a short period of time.

Although this will inevitably lead to the food for the first time, this is capital operation!

Capitals in Silicon Valley and Wall Street quickly smelled the capital smell, Netflix's old ways of capital operation,

Not like a startup at all.

After Mark Randolph was interviewed by the Wall Street Journal, major U.S. venture capital institutions have turned their attention to Netflix's startup.

In less than three days, many investment institutions such as Sequoia Capital, Kelpen Huaying, IDG came one after another.

Mark Randolph did not rush to promote Netflix's financing, but instead took this opportunity to give Future

Fantasy raised a good price.

In order to express sincerity, Sequoia Capital gave FutureFantasy a valuation of US$35 million and acquired 14.29% of FutureFantasy's equity for US$5 million.

This valuation is 40% higher than the previous $25 million.

Reed Hastings was complacent about this successful financing, but when he heard the valuation given by several major venture capital companies to Netflix, he was not happy.

"Sequoia Capital, valuation of US$120 million."

"Keepin Huaying, valuation of $130 million."

"IDG, valuation of US$115 million."

"UpfrontVentures, with a valuation of $120 million."

In Netflix's conference room, Mark Randolph listed the quotes from various venture capital companies he has contacted in the past few days.

The valuations given by each company are different, and the equity requirements are different, basically between 15 and 20%.

The financing valuation that is several times greater than FutureFantasy makes Reed Hastings breathing a little rapid. How great would it be if FutureFantasy's these valuations were!

Tao Yushu looked at these data, and his expression on his face was unpredictable.

Mark Randolph knew very well that for a billion dollar tycoon like her, these offers were really nothing.

After a discussion, several people did not rush to determine which venture capital investment to accept.

In the eyes of the outside world, Netflix startups dare to burn money like this, and now they must be extremely eager for capital demand, and maybe they are already struggling.

But the facts are different from everyone's expectations. With the support of a wealthy man like Tao Yushu, it is not impossible for Netflix to support it independently until it goes public.

However, Tao Yushu is now familiar with the rules of Silicon Valley and the American business community, so he naturally does not want to eat alone.

She will definitely sell out the equity that should be sold, but whoever can become a fellow Netflix must decide.

Before this, these people should show their sincerity.

Tao Yushu is used to the absolute control of the company's equity, so she will not let Netflix conduct too many rounds of financing.

It is necessary to raise funds to support Netflix's development and ensure control over the company, so it is bound to be comparative of the valuation.

"In the past week, Netflix's website has increased by 420% again, and our popularity among American online names is increasing significantly.

Not only that, in the new week, our order volume increased from the previous 7,500 orders to 16,400 orders, and DVD sales reached US$75,000 in a single week.

In terms of rental business, the number of subscribers increased to 31,500, of which the annual subscribers have exceeded 10,000.

Before October, Mark Randolph wandered among various venture capital companies and promoted Netflix's achievements in the past half month.

In every move, my confidence is full of no other than me.

This confidence was brought to him by Netflix's rapid progress, and also by Tao Yushu's strong support behind him.
Chapter completed!