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Published 06 December 2012 05:13, Updated 06 December 2012 06:15
Photo: Louie Douvis
It was a stormy week for online video business Quickflix, with the listed company slashing one-third of its workforce and facing upheaval of its board of directors.
The consumer entertainment company, which offers online DVD rental, movie streaming and IPTV (television via the internet), has reported spiralling costs in its filings to the Australian Stock Exchange and sank further into the red in 2012.
The company, which has 100,000 customers and annualised revenue of $20 million, is seeking international investment to shore up the business and has engaged New York-based advisory firm MESA to help find an investor.
Quickflix began as an online DVD rental business similar to Netflix in the United States and Lovefilm in the United Kingdom in 2004 and listed on the ASX a year later. The online DVD rental part of the business is still profitable, according to reports to the ASX, but, like its foreign counterparts, it needs to move customers to streaming movies and TV – a business that has a lower fulfilment cost and is in alignment with consumer trends.
The growth prospects for internet protocol TV are good as the national broadband network rolls out across Australia but the space is rapidly becoming a crowded and competitive market, with new entrants such as Apple TV, Fetch TV and Telstra’s T-Box, while broadcasters and contents rights holders are moving to deliver their own services.
Quickflix is burning through more than $1 million in cash every month but expects its restructuring program and job cuts to deliver full-cost savings in three to six months.
In the past month, the company has dealt with the resignations of chief executive Chris Taylor and three board members – Justin Milne, Susan Hunter and Henry McGee. Founder and executive chairman Stephen Langsford has stepped up as CEO.
The company reported a net loss in full-year 2012 of $13.97 million, up from $2.96 million the previous year. Capital expenditure increased from $4.2 million to $8.6 million in that time as the company rolled out its digital service. Meanwhile, the cost of customer acquisition rocketed to $60 per customer, compared with $31 in 2011.