The founder and CEO of Australian subscription video-on-demand (SVOD) provider Quickflix has expressed confidence that the company will successfully reposition and restructure following its entry into voluntary administration.
The embattled streaming service provider entered voluntary administration on Wednesday after failed negotiations with competitor Stan over its redeemable preference shares worth AU$11,730,549.
Stan, a joint venture of Nine Entertainment and Fairfax Media, took ownership of the Quickflix RPS in July 2014, when Nine acquired the shares from HBO for an undisclosed amount. HBO had been issued the RPS by Quickflix in March 2011 during their AU$10 million commercial deal.
Stan told Quickflix that it would only consider structuring the RPS if Quickflix were to pay it AU$4 million in cash or AU$1.25 million in cash plus transferring all of its customers -- worth AU$250,000 -- and signing an agreement not to compete.
"Whilst Nine indicated that they were treating the acquisition as a financial investment, their actions -- and inaction -- since the acquisition tend to indicate otherwise," Langsford said on Thursday.
"We had discussions regarding restructuring the RPS in a way that would allow us to raise new capital and grow the business, but it became clear that Stan had a different agenda, and was primarily driven by the goal of gaining our member base and removing us as a competitor."
After losing 7,856 customers over the December quarter, Langsford said the streaming service added 2,200 new subscribers in the last week, partially due to Star Wars: The Force Awakens being added to its stable of content.
Following its announcement earlier in April that it would be making 15 percent of its staff redundant and shuttering its Sydney CBD and Auckland offices among other cost-saving measures, it last week also reported turning its cash flow around.
Net operating cash flows for January to March were AU$462,000 -- a AU$551,000 jump from the negative AU$83,000 announced for the December quarter -- and cash at the end of the period stood at AU$1.04 million, 57.8 percent higher than last quarter's AU$659,000.
Although receipts from customers fell by 5.8 percent, from AU$3.263 million [PDF] down to AU$3.074 million [PDF], Quickflix's total operating and investing cash flows also turned positive, from negative AU$180,000 in December back to AU$381,000 in March.
This was partially due to a substantial decrease in staff costs -- from AU$1.141 million down to AU$930,000 thanks to the redundancies. Its advertising and marketing costs almost halved, from AU$431,000 in December to AU$231,000 in the March quarter.
Langsford on Thursday added that the Quickflix management will be submitting a Deed of Company Arrangement to allow for new capital to be raised as the company repositions as an ecommerce, digital consumer, and entertainment service.
New content and marketing plans are being developed by both the administrators and Quickflix's staff members, Langsford said.
Quickflix added that the administration will not affect its existing and new Australian customers, as it intends to operate as usual. The company also added that its New Zealand business is not in voluntary administration.
Langsford had previously told ZDNet that Quickflix has lost so much ground to its competitors that it is turning its focus towards launching into the technology and ecommerce service sectors.
"We have a vision now to ... do things beyond the entertainment sector as a kind of an innovator, a technology platform; we've got a large customer base to market to," Langsford said in an interview in February.
"There are some very exciting opportunities out there: Digital businesses, ecommerce businesses that would be quite compatible with Quickflix so that we're able to, in time, basically reposition the listed group to something like a tech, commerce, and entertainment group, [of] which the existing Quickflix business is kind of a division."