Quickflix will outsource content licensing to Presto in a bid to make the struggling Australian streaming video company competitive against global giant Netflix.
The company was one of the first video-streaming services in Australia, but in recent months has faced intense competition from new players in the market, including Stan, Presto, and Netflix.
ZDNet understands that internet service providers (ISPs) have seen Netflix traffic making up the most traffic for streaming video, followed far behind by Stan and Presto.
Exiting a trading halt this morning, Quickflix announced that it had entered into an agreement with Foxtel to put Foxtel's TV and film content from its own streaming-on-demand service Presto onto the Quickflix platform.
The move means that the existing streaming content on the Quickflix platform will be replaced by the streaming content licensed by Foxtel for Presto, while Quickflix will continue to offer its transactional video-on-demand service that allows customers to pay per view for premium content including HBO shows, and its DVD mailing service.
The move comes despite the parent company of streaming rival Stan, Nine Entertainment, having 83 million preference shares in Quickflix, including a warrant to allow the company to get a AU$10.5 million payment in the event of a takeover or merger with Stan.
The company's CEO Stephen Langford declined to state whether Quickflix had discussed the deal with Nine before the announcement, but said the deal was designed to combine the Quickflix platform with the Presto content.
"It's a dynamic industry, but fundamentally, Foxtel Presto has an impressive line-up of content both now and into the future, backed by Foxtel and Seven West Media. We think it'll be a great boost by integrating that content proposition into our platform, and making that available across all the devices we currently reach," he said.
"Our motivation for this was to basically continue to evolve the service. This also results in a fundamental improvement in the overall economics of Quickflix for the business. It's a good thing all around."
Another upgrade to the platform will be made over the coming months, Langford said, but he said Quickflix would be getting out of licensing for non-pay-per-view content.
"I guess that's a way of looking at it. [Presto] will be integrated in our existing apps, and it will complement our transactional streaming content that will continue to go deeper and expand across all studios," he said.
"We will be transitioning away from our own procurement of subscription streaming content as a result of this deal."