Australian subscription video-on-demand (SVOD) provider Quickflix has announced yet another round of cost-cutting exercises, this time through shuttering its Sydney CBD and Auckland offices and making 15 percent of its staff redundant.
The embattled streaming provider will also "insource" its customer care and support, reduce costs in its Perth office, trim down its delivery network charges, and require one board member to step down.
Quickflix is hoping to save around AU$1 million per annum through these measures.
Executive directors have also agreed to a "substantial reduction" in their salaries: CEO and founder Stephen Langsford's salary will be reduced from AU$280,000 down to AU$200,000, while CFO Simon Hodge's salary will shrink from AU$250,000 down to AU$170,000 as of April 1.
Any part of their salaries exceeding AU$150,000 will also be deferred in payment so as to provide the company with extra cash reserves until it raises a minimum of AU$2 million through the issue of new equity.
"Non-executive director David Sanders has also agreed to step down from the board to reduce the number of directors to the minimum required by the Corporations Act and reduce corporate overheads," the company said in its statement to the Australian Securities Exchange [PDF].
Quickflix had dumped 20 percent of its workforce in October to attain AU$1.7 million per annum in cost savings, with another AU$2.3 million per annum in savings achieved by adjusting the company's content management, tech development and infrastructure, corporate overhead, call centre support, and marketing processes.
The company then successfully restructured debts of over AU$7.5 million by signing deals with several "major" studios.
Quickflix must also address the redeemable preference shares (RPS) that made their way into the hands of one of its competitors, Stan, in order to make its business more lucrative to investors.
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 commercial relationship.
Stan's RPS, though legally an equity, are recorded as debt amounting to AU$11,653,329 due to accounting standards.
RPS outrank ordinary shares in terms of dividends and capital returns, meaning Quickflix is having difficulties in attracting investors while the RPS is in continuation. Due to its plummeting customer numbers and declining sales, Quickflix also cannot fund redemption of Stan's RPS.
"We're certainly in negotiations with them [Stan], and obviously I cant go into the nature of those, but we have stated clearly to the market that we're a small player that's made an investment, that's delivering a service, that in the whole completion of the restructuring process, we need more capital, and to have that structuring base is essentially an impediment that needs to be addressed," Langsford told ZDNet in an interview at the start of this year.
Langsford added that Quickflix has lost so much ground to its competitors that it is turning its attention towards launching into the technology and ecommerce service sectors. The company does not plan to completely abandon entertainment, however.
"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 with ZDNet.
"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."
In order to sustain its core business, Quickflix needs to attract investor support -- a difficult task after repeated customer losses during 2015 following the launch of Netflix Australia and the entry of local streaming services Stan and Presto. This was exacerbated by telcos Optus and iiNet offering unmetered access to Netflix, with Optus also providing unmetered access to Stan.
Quickflix had reported 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.
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.
Quickflix also continued losing customers over the second FY16 quarter; as of the end of December, its 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 December quarter.
By comparison, the Australian Communications and Media Authority estimated that as of June 2015, Netflix Australia has 2.5 million users.