Quickflix continues descent in wake of streaming competitors

Australian subscription video-on-demand (SVOD) company Quickflix has announced its second-quarter results for FY16, revealing a 35 percent year-on-year drop in customer receipts, from AU$5 million in December 2014 to just AU$3.3 million at the end of December 2015.

Quickflix also continued losing customers over the quarter; as of the end of December, Quickflix's total customer base was down by 26 percent year on year, from 136,670 customers to 101,195. Its total paying customers similarly fell by 21.6 percent, from the 117,106 in the same quarter a year previous to just 91,817.

It lost 7,856 customers over the quarter.

Total receipts for the quarter amounted to AU$3.9 million, including a research and development tax rebate of AU$0.6 million.

Net operating and investing cash outflow amounted to negative AU$180,000, with operating and investing costs increasing by 2.6 percent quarter on quarter to AU$4.1 million.

Average monthly receipts per paying customer totalled AU$10.54, a drop of 7 percent from last quarter's AU$11.39, and a decrease of 20 percent from the AU$13.12 reported during the same period the year previous.

Quickflix also provided an update on its restructuring program, saying it is now focused on raising new capital.

"In parallel, the company is looking for corporate opportunities, including a potential transaction(s) with complementary content, digital consumer, ecommerce, or technology services businesses which leverage Quickflix's customer and revenue base and technology platform," the company said in its statement to the Australian Securities Exchange (ASX) [PDF].

"In combination with the right business(es), there is an opportunity for the expanded group to cross-sell products and services to drive customer revenues at lower cost of customer acquisition."

At the end of December, Quickflix had announced the recovery of AU$7 million in debt through licensing deals with "major" studios, helping the struggling streaming service to continue competing with Netflix, Presto, and Stan.

According to Quickflix, its remaining SVOD payment obligations were restructured, with "certain royalty payments" to be based on revenues made from July 1, 2016. The company also agreed to issue more than 51 million options for ordinary shares to be non-exercisable until October 31, 2018.

Quickflix's restructure program saw the company attain AU$1.7 million per annum in cost savings by dumping 20 percent of its workforce.

Another AU$2.3 million per annum in savings was achieved by adjusting the company's content management, tech development and infrastructure, corporate overhead, call centre support, and marketing processes.

"Since the start of the program, the company has reduced headcount by over 20 percent, which has yielded a 33 percent reduction in staff costs, or over AU$1.7 million per year once complete," the company said.

Quickflix also signed deals with streaming services in the APAC region to bring more customers on board.

Quickflix's results for the quarter ending September 30 were similar, with the loss of 12,076 customers -- a 10 percent drop quarter on quarter, from 121,127 customers down to 109,051.

The company had also reported a 14 percent drop in its customer base for the quarter to June 2015, and a net operating and investing cash outflow of AU$1.1 million, a 29 percent quarter-on-quarter drop.

It had attributed its customer losses to the launch of Netflix in Australia and New Zealand, particularly because of deals with telcos Optus and iiNet to offer unmetered access to Netflix. On Tuesday, Optus announced that it would also be offering unmetered access to Stan.

Analyst firm Ovum in November predicted the rate of streaming subscriptions within Australia to increase by a factor of 17 between 2014 and 2019, to reach 4.707 million subscribers. The Australian Communications and Media Authority (ACMA) also estimated that as of June 2015, Netflix Australia has 2.5 million users.

While streaming services are increasing competition in the sector, Ovum said that no form of television, including free TV and pay TV, will face "dramatic abandonment". Rather, streaming will become the dominant form of TV consumption.