news Ailing IPTV and online DVD rental business Quickflix has revealed plans to sack one third of its workforce and initiate a plethora of other restructuring moves as it struggles to keep its trouble-plagued business afloat.

Late last week the company revealed that the President of US cable television giant HBO, which signed a major content licensing deal with Quickflix in January this year, would unexpectedly leave its board.. Subsequently, yesterday Quickfix revealed in a further statement that several other senior executives helping to guide the company would be stepping down. Firstly, Quickflix chief executive Chris Taylor, who only took up the post in July 2011 after leaving Telstra’s Media division to do so, has resigned as the company’s chief executive and will leave in March 2013.

Taylor will be replaced by Quickflix founder and executive chairman Stephen Langsford, but the company will also lose other talent in the form of non-executive director and deputy chairman Justin Milne, who also had a lengthy career at Telstra before joining Quickflix’s board, and non-executive director Susan Hunter, who will step down from Quickflix’s board but remain the company’s secretary.

Yesterday those moves were followed by an extensive series of further changes as part of the company’s ongoing restructuring plans. In a new statement to the Australian Stock Exchange, Quickflix said it would reduce its headcount by one third, resulting in a saving of $2 million per year. The Australian has reported that up to 30 jobs will go under the restructure.

The company also pledged to enhance its revenue-generating opportunities and average revenue per customer by leveraging its content delivery and customer platform, and its existing billing relationship with customers; lower cost of customer acquisition and stop traditional branding advertising (with new promotional campaigns to focus on devices which Quickflix’s IPTV service can stream to); reduce its capital expenditure associated with the deployment of its IPTV platform, consolidate and optimise its DVD rental fulfilment centres; maximise the utilisation of its existing online DVD rental disc library and expand its latest release pay per view streaming offering.

The news comes as Quickflix has recently inked a number of deals to see its streaming media content distributed through popular platforms such as Microsoft’s Xbox 360 console, and its revenue has simultaneously been growing; in the year ending 30 June 2012, Quickflix pulled in almost $17 million in revenue for the year, compared with close to $11 million the year previously. In addition, the company has rapidly been growing its customer numbers, counting some 111,000 at the end of June this year.

However, the company also continues to suffer increasing losses. In that year, Quickflix lost close to $14 million, up dramatically from a loss of close to $3 million the previous year, with most of the increases coming in the form of marketing, content and distribution and staffing costs. At the end of June 2012, Quickflix had just $15.4 million in total assets, including just $6.8 million in current assets. It had $5.7 million in cash at that point.

In its statement this week, Quickflix maintained that its situation was still “fundamentally sound”, despite its problems. “Quickflix is the only online DVD rental provider in Australia of scale and it is the only company in Australia and New Zealand offering “all you can view” monthly subscription to movies and TV to a wide range of popular consumer devices including smartTVs, game consoles, computers and mobile devices,” the company said.

“As the leading player of its kind it has the early mover advantage ahead of would-be competitors and new entrants. Quickflix has developed a state of the art technology platform and has an expert team experienced in entertainment and technology. It has secured subscription and transaction video on demand streaming rights with leading Hollywood studios and secured distribution in the critical global brand name devices. Quickflix has grown its customer base to well over 100,000 customers generating revenues of $20 million per annum (annualised).”

“In contrast to other traditional media and entertainment players in Australia with legacy businesses to protect, Quickflix is a pure-play in the best position to benefit immediately from growing consumer take-up of IPTV streaming. It is still early in the cycle of streaming take-up and mainstream consumers have yet to fully embrace the streaming capabilities of their new smart TV or other devices. Quickflix will benefit as device manufactures, content owners and even competitors educate consumers on the benefits of streaming and help build the category. It will also benefit from the rollout of high speed broadband under NBN and the growing imperative of ISPs to differentiate through bundling of services like Quickflix streaming. Quickflix has a profitable and growing online DVD rental business and is able to leverage this service to transition customers to streaming movies and TV at a fraction of the fulfilment costs.”

opinion/analysis
I have to say, I would not be surprised if another company – perhaps an Internet service provider? – was to attempt to buy Quickflix or at least take a sizable equity stake in the next little while. The company is exhibiting all the signs of a business which may not be around in the medium-term. But it still does have a great deal of intellectual property and knowledge of the online video delivery market, which many, many organisations would like to expand into. It seems likely that the business we know as Quickflix will eventually become a feature offered as a bundle by another group.

I am honestly not sure, at this point, whether it will be able to survive on its own, or for how long. Its financial position is also made dramatically more complex by the fact that it is a publicly listed company and has to hang out its dirty laundry for all to see on a regular basis. Private investors (such as venture capital firms, for example), will sometimes be prepared to wait poor situations like this out so that the business can recover and grow over the long term. Public investors who buy shares, however, are not always as forgiving.

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1. PointZeroOne
   Posted 30/11/2012 at 2:31 pm | Permalink | Reply

   iiNode should buy it.

   • Renai LeMay
     Posted 30/11/2012 at 2:36 pm | Permalink | Reply

     I agree.

     • PointZeroOne
       Posted 30/11/2012 at 2:37 pm | Permalink | Reply

       I’ve just switched our subscription with Quickflix to streaming, see how it goes over the next few weeks as we haven’t been using the mail out service for months.

       • Renai LeMay
         Posted 30/11/2012 at 2:49 pm | Permalink | Reply

         I am planning to do a review of Quickflix IPTV at some point; hopefully I can get it done before the company folds.

   • Adam Nelson
     Posted 30/11/2012 at 6:50 pm | Permalink | Reply

     Quickflix was owned by Netspace originally. Which then bought by IINET

     However according to whirlpool. Quickflix wasnt part of purchase

     The key problem with quickflix is first impressions count. My first impression has been lack of titles and restricted to only Warner Bros content

     It will suffer the same problems as Tivo!

2. Brendan
   Posted 30/11/2012 at 3:34 pm | Permalink | Reply

   I’d be surprised if iiNetNode have much interest. They’ve pitched their tent with FetchTV (unsurprisingly, TiVo ended up being a dead end).

   • Renai LeMay
     Posted 30/11/2012 at 3:39 pm | Permalink | Reply

     True, but FetchTV has pretty much been a failure for iiNode so far.

     • Brendan
       Posted 30/11/2012 at 5:15 pm | Permalink | Reply

       Most IPTV services aren’t working out too well in Australia. Probably because we don’t have ubiquitous high-speed access, broadly deployed that will support it.

       Between crappy internet connections, and distributors still bound to the mafia code of knee-capping services outside of traditional distribution, it’s surprising that any IPTV solution can gain traction.

       I’m not sure even Foxtel is getting that much traction with their IP based services either.

       Maybe you should ask the Member for Wentworth what the L/NP plans are for IPTV over FTTN. Should be most enlightening. ;)

       • Elijah B.
         Posted 01/12/2012 at 9:52 pm | Permalink | Reply

         +1.

         Poor speed, small content base and sheer bloody-mindedness by the rights controllers make such services v. difficult to develop. Earl J. Wentworth probably would be happy to see the business go belly-up because it would show less need for faster speed.

3. djos
   Posted 30/11/2012 at 3:37 pm | Permalink | Reply

   If they’d release their xbox360 client already i’d be willing to give them another go!

   • inabeyance
     Posted 30/11/2012 at 9:03 pm | Permalink | Reply

     The Xbox360 client has been available for a few weeks now. Currently if you are a GOLD Live subscriber you get a 1 month free trial of the service (just don’t forget to cancel before the month is up or you will end up getting charged $12 odd)

     The service works pretty well, I have just watched all the available episodes of Yes Minister and Hornblower, but the usual content issues with Australian based IPTV is still there. There is very little current (or good quality for that matter) content available.

     I feel it will be back to Netflix for me at the end of the trial. I want to support an Australian based IPTV company, and I have been watching and waiting for Quickflix to get their streaming product online, but if this is how it is going to be due to the content mafia barons then; I feel it will be piracy that will be the big winner again (and Netflix for the industrious few).

     • Djos
       Posted 30/11/2012 at 9:38 pm | Permalink | Reply

       Cheers, i’ll give it a go. :-)

     • djos
       Posted 30/11/2012 at 10:13 pm | Permalink | Reply

       Thanks for that, I’d been waiting for the 360 client before I gave it another go and it’s quite nice even on my POS 4mbps adsl connection – the content depth is lacking a bit tho so not sure how long I’ll keep it.

       It really brings up the issue of the content mafia tho – we need laws to prevent content lockdown and discriminatory pricing!

       The reason video stores did so well for so long was due to there being no content lockout across different chains and independent stores but for some reason the digital equivalents are plagued with lock down (even Netflix suffers from this to a certain extent).

4. Rhys
   Posted 30/11/2012 at 3:46 pm | Permalink | Reply

   If they can hold out a few more years, get in some more interest from the American channels, then the NBN could be out to enough people to stir interest. Though i’ll be using unblock us and netflix.

   • Mike Brown
     Posted 30/11/2012 at 6:18 pm | Permalink | Reply

     +1 for Unblock Us and the U.S. version of Netflix.

     Blows any UK or Australian service out of the water.

     • Brendan
       Posted 04/12/2012 at 2:59 pm | Permalink | Reply

       With people realizing how we a getting shafted with content prices for what is a essentially a regionalisation for charging of programing. The parliament has allowed parallel importing, the governer generals office consider using netflix and others parallel importing I really fail to see how a quickflix can survive unless the can negotiate content deals for the same price as netflix and others in the US.

       Quickflix only hope that I see is;
       1) Getting into quota free download space
       2) Getting into smart devices

       Both of which I believe they have tried but it is still insufficient to ensure the revenue.

5. Arran
   Posted 30/11/2012 at 5:18 pm | Permalink | Reply

   I guess there having troubles because of people downloading movies or who have Foxtel. Foxtel is a major player in this field

6. Michael
   Posted 30/11/2012 at 6:38 pm | Permalink | Reply

   Quickflix has always been a joke.

   When i read this article.

   http://delimiter.com.au/2012/05/08/an-aussie-iptv-revolution-we-can-believe-in/

   I was pretty surprised at how much the biggest issue Quickflix faces was avoided- terrible, terrible content.

   Having a HBO president on the board and releasing content 12-18 months after it comes out in the US?

   Expecting people to pay to get DVD’s mailed out in 2012?

   Quickflix has always had extremely aggressive marketing with free trials etc. But they’ve been held back by the content. This isn’t entirely their fault as its the copyright holders who are stuffing them around.

   Australians aren’t stupid, its a global economy and as free to air and quickflix are finding out we wont accept the cold leftovers of american tv shows any longer. If someone is enough of an early adopter to use quickflix they will also use torrents and vpn’s and proxies etc to get their content. If they aren’t they will get a better service from foxtel.

   What quickflix should have done is sign a proper deal with HBO (the president was on their board as said above) so that the content is realised 12-18 HOURS after its realised in the US. That alone would be worth the subscription to me (i watch a heap of HBO). The movies and other tv shows would be a longer path.

7. Michael
   Posted 30/11/2012 at 10:20 pm | Permalink | Reply

   As others have said, Quickflix’s biggest problem is lack of content. Plain and simple.

   I’ve browsed around Quickflix before and found that they had literally *zero* I wanted to see.

   So, it was straight back to the less legitimate methods of obtaining content. I am happy to pay a local provider and happy to pay a SIGNIFICANT amount of money if it means they actually have good content.

   I suspect, if Quickflix were to survive another year or two, the situation would improve because they would become the “born monopoly” for online streaming. At the moment, it seems copyright holders are keeping everything close to their chest, maybe in hopes of launching their own service. It benefits nobody, as we see in the US. People actually WANT the middleman because everything is in the one place then. Netflix wasn’t great to start with, either, but eventually it got to a critical mass and all the content providers just said, OK we’ll join.

8. Stephen Langsford
   Posted 01/12/2012 at 12:00 am | Permalink | Reply

   Support us please folks– we will come out of this little chapter much stronger.

   Best Stephen
   Founder & CEO

   • Djos
     Posted 01/12/2012 at 6:46 am | Permalink | Reply

     Hi Steven, the Xbox client is a really good start but its missing two things:

     1/ doesn’t remember if you stop part way thru a movie or tv show (life gets in the way sometimes)
     2/ content library is mostly pretty old and small – I know this is mostly the content mafia’s fault but companies like yours need to publicly lobby the government to give cloud based business the same rights as a video store chain!

   • Ray
     Posted 01/12/2012 at 9:46 am | Permalink | Reply

     Sorry, no can do on the supporting front, you guys ripped me off a few years back, left a bitter taste in my mouth.

     I was no longer using the DVD rental service, i had paid for a full month but never actually used it, one person in Quickflix said if i ring up and cancel my account on such and such day, i would get my money pro-rata’d back, that day came, i rang, cancelled account, was told no i could not have my money back, that was 50AUD wasted for a service i hadn’t used at all.

9. mbbsc
   Posted 01/12/2012 at 8:12 am | Permalink | Reply

   I don’t get why people would pay for streaming movies when you can get them for FREE on the internet !!!
   even for the latest movies dropped from the cinema a few months ago.

   My friends just watched the “Batman – Dark Knight Rises” on the internet a few weeks ago.

   QUICKFLIX’s business model just don’t work, I will bet it that it will fail in 1-2 years, unless they continue to get hallow head investors….

   • djos
     Posted 01/12/2012 at 8:17 am | Permalink | Reply

     Because for $14.95 a month you wont get the content Mafia suing you for copyright infringement ….

     But I know what you mean, I DL movies too but it’s usually because Im not sure if they are worth buying, if they are great movies then I’ll frequently buy them on BluRay.

     If QF could get access to ALL the movies at the same time as they are released in stores then they’d do a roaring trade and they’d prolly boost DVD/BD sales at the same time (but the content mafia are too stupid to figure this out).

   • Rainier Wolfcastle
     Posted 01/12/2012 at 8:41 am | Permalink | Reply

     Unlock us plus netflix is QF’s biggest competition.

     The quicker they can get better content, the quicker they will get out of the mire.

     • djos
       Posted 01/12/2012 at 8:48 am | Permalink | Reply

       True but the average Joe out there doesnt have the skills to get unblockUS + Netflix working and being able to buyan xbox360 or Panasonic BD player and have QuickFlix just work would be a big selling point imo (assuming the content get sorted).

   • Elijah B.
     Posted 01/12/2012 at 10:09 pm | Permalink | Reply

     “I don’t get why people would pay for streaming movies when you can get them for FREE on the internet !!!”

     Because not everyone really wants to obtain shows this way; not only is it dangerous, but many would be willing to pay for an acceptable (note that word, rights controllers!) service at an acceptable cost, and have a clear conscience.

     Whatever arguments are put forward about whether it’s piracy or the right to share what one owns, the fact is that obtaining shows this way leaves many with a yucky feeling, and they’d rather an up-front alternative for viewing shows online.

     This is what the rights controllers steadfastly deny us, and then bleat about thieves and piracy (pot, kettle, black). This is a problem they could fix easily, if they had the will to make more money than they do, instead of their “We get everything; you get nothing” way of doing business.

     If there was a legal source to obtain ALL the movies from ALL the studios and ALL the TV shows from ALL the makers, for a low fee, huge numbers of people would opt to join. So-called piracy would effectively vanish and become the province of the die-hard.

     This is nothing that hasn’t been said before; regrettably the rights controllers don’t want to hear this, and rather pursue people in court around the world and trash their corporate reputations in the process.

     • djos
       Posted 01/12/2012 at 10:59 pm | Permalink | Reply

       Not to mention the convenience factor of instant streaming!

       Having personally tried NetFlix and QuickFlix it is really nice just to sit down and scan thru the available movies and hit play on the one you want to watch with no BitTorrent/Usenet clients to worry about and no MKV’s with missing Subtitles or funny encoding methods that might crash your bluray/media player.

10. Edmund Hillary
    Posted 02/12/2012 at 3:12 am | Permalink | Reply

    Stephen Langsford “Support us please folks”

    How about supporting you own company?
    A few weeks ago you were on “holiday” climbing Mount Everest!
    Talk about clueless!

    “we will come out of this little chapter much stronger”

    This little chapter has been your whole story.
    No profit since day one.

    Oh, NOW you’re cost-cutting!
    You should have been living within your means years ago.

11. Stu
    Posted 04/12/2012 at 3:52 pm | Permalink | Reply

    I’m surprised people are so hard on Quickflix.

    I have been a mail out subscriber for a few years and their service has been great. I tried their streaming service but the tech (on my side) let me down. I’ll probably try the streaming again when (if) the NBN gets to my place.

    The DVD service has a brilliant variety far better than any local video store could offer and they have acquired DVDs for me when I’ve asked (ABC for Kids shows).

    I will be disappointed if they are unable to trade out this current crunch.

    • djos
      Posted 04/12/2012 at 3:59 pm | Permalink | Reply

      QF’s mail service was great back in the day’s before HD-DVD was killed off by BluRay … and then QF decided to charge a premium for BD’s and I decided I wasnt getting enuf value from my sub and quit (had a baby and almost no time to watch movies around the same time).

      • Stu
        Posted 04/12/2012 at 4:11 pm | Permalink | Reply

        Its now the same price for BD and DVD…

        • djos
          Posted 04/12/2012 at 4:16 pm | Permalink | Reply

          Im not surprised, existing customers prolly gave them a spray for that dumb idea!

    • xBeanie
      Posted 01/01/2013 at 4:31 pm | Permalink | Reply

      I like the bluray mailout service too. Avoids having to decide on what to watch each time, particularly when more than one person is involved.

      Get a little annoyed with them trying to push IP services down my throat though. I didnt spend $$ on the 1080p Plasma to watch 10 year old movies in low definition. Also annoyed at having to wade through the TV series disk sets to find the movies.

      If QF go belly up, given a lack of alternatives I think there will be a lot of customers resorting to not so legitimate means.

    • Simon
      Posted 13/03/2013 at 8:40 am | Permalink | Reply

      I agree, Quickflix is amazing. DVDs to your post box the next day, great content and easy to use. It’s sad that the masses want everything immediately ie the streaming, and whinge when it takes a bit of time to develop.

12. xBeanie
    Posted 01/01/2013 at 4:42 pm | Permalink | Reply

    Sort the QF streaming offerings by year and look at the results:

    Latest title: 2011
    Latest title I’ve heard of: 2009
    Latest title I would consider mainstream: 2005

    Anything newish/popular: Have to pay $6 on top of subscription.

    And they wonder why they are struggling.

13. Djos
    Posted 01/01/2013 at 7:39 pm | Permalink | Reply

    I cancelled my QF play sub as frankly the content stinks!

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