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Quickflix Hemorrhaging Subs to Netflix Down Under

4 Aug, 2015 By: Erik Gruenwedel

Australia’s first subscription streaming service sounds warning, claiming monthly 5,000-sub loss to newcomer Netflix

That didn’t take long.

Quickflix, Australia’s longtime by-mail disc rental service and first subscription streaming platform, reported a 14% drop in total subscribers year-over-year, including a 13% decline in paying subs for the fiscal quarter ended June 30. Revenue fell 15% to $4.2 million (Australian), resulting in a loss of $8.6 million.

Perth-based Quickflix ended the quarter with nearly 108,000 paying subs (121,000 total), which include disc subs.

The culprit is Netflix, the SVOD pioneer that in March launched service in Australia and New Zealand. 

“The impact of Netflix’s arrival was largely felt at the beginning of the quarter, underscoring the effect of the pent-up [SVOD] demand at the time of launch,” CEO Steve Langsford wrote in a regulatory filing.

Indeed, Netflix penetration includes an estimated 559,000 households, or 6.1% of Aussie homes (1.42 million individuals), including 151,000 household additions in June, according to Roy Morgan Research.

Morgan said that by May, 97,000 Aussie households subscribed to SVOD rivals Presto, from Foxtel and Seven West Media; 91,000 to Stan, which Nine Entertainment and Fairfax Media launched in January; and 40,000 to Foxtel Play, the streaming version of its pay-TV service. By comparison, Netflix was in 408,000 households.

Langsford questioned the data after Morgan claimed Quickflix had just 43,000 household subs in May. The CEO cited government data that found more than 30% of Aussies were familiar with Quickflix compared with 50% for Netflix.

“The company expects it will take some time for the market to settle down and for consumers to determine which service, or services are ultimately right for them,” he wrote.

Regardless, publicly held Quickflix scuttled plans to distribute Presto, citing contractual disagreements. It also halted trading of its shares Aug. 3, claiming a possible third-party acquisition was in the works.

Separately, Netflix disclosed it will launch service on Sept. 2 in Japan — the world’s No. 2 packaged-media market.

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