Quickflix Gets $5.2 Million Lifeline3 Jan, 2013 By: Erik Gruenwedel
Netflix-type by-mail and SVOD rental service has struggled to find success in the Commonwealth
Quickflix, the fiscally challenged Australian-New Zealand movie rental service has received $5.2 million in promissory funding from a group of investors led by Alkiviades “Alki” David, founder of Internet-based TV provider FilmOn.com.
The funding reportedly includes an immediate payment of $1.5 million and separate payments of $1.75 million in February and March. In return, David and an associate, Tim Boyd, joined the Perth-based by-mail and subscription video-on-demand service’s board of directors, according to a report in The Australian.
While positioning itself as the only “Netflix-type” service in Australia and New Zealand offering SVOD and disc rental movies and TV shows to connected consumer electronics devices, Quickflix has hemorrhaged money attempting to emulate the by-mail and SVOD pioneer.
Quickflix late last year cut staff and other expenses after posting a fiscal-year (ended Sept. 30) loss of nearly $14 million (Canadian) on revenue of $20 million, compared with a loss of almost $3 million during the previous year.
The service, which last year received $1 million in funding from HBO, said it had just $2.2 million in funds available while ending the fiscal year with less than 116,000 monthly paying subscribers from a base of 160,000 signups. Worse, Quickflix spent $60 per subscriber acquisition ($9.8 million) — nearly double the cost it took to attract a sub in 2011.
Indeed, Quickflix said its disc rental business is profitable and provides the basis of revenue to underwrite rollout of the SVOD platform.
The service said it planned to curb current $1 million monthly cap-ex spending by restructuring operations, including combining DVD and digital services and fulfillment, and reducing staff by one third, which will save $2 million annually.
Quickflix also plans to better utilize its disc library through improved recommendation software, reduce DVD investment, expand pay-per-view offerings and maintain SVOD spending in line with subscriber growth.