Quickflix is going cap in hand to its customers for money after shareholders snubbed the online streaming service's latest capital-raising effort on the Australian Securities Exchange (ASX).
The Perth-based company, the first movie- and TV-streaming business in Australia, is asking its 120,000 customers to buy up to AU$1 million in new shares.
It comes after shareholders took up just AU$650,000 of the AU$5.7 million worth of new shares on offer in its latest renounceable rights offer.
In a letter to customers, chief executive Stephen Langsford said that any funds raised would be put towards working capital and to invest in new content and marketing.
The company is looking to beef up its offering as it braces for an onslaught of competition in 2015. Global giant Netflix will establish its Australian service in March, while Nine and Fairfax's joint streaming venture, Stan, will launch early in the new year and Foxtel will expand its online Presto offering to include TV.
Quickflix is offering more than 330 million shares to customers at a price of 0.3 cents each, which is above its current 0.2 cent share price.
The company, which was established in 2004, has accumulated tens of millions of dollars worth of losses in recent years, including a loss of more than AU$10 million in 2013-14.
The company had previously said that some of the potential funds would be put toward "working capital", and, in its Offer Information Statement document (PDF) to shareholders, admitted that a failure to raise sufficient funds could affect its operations.
"There is no guarantee that the company will raise sufficient funds to achieve the company's objectives, and there may be restrictions on the company's financing and operating activities," the document said. "Further, the company may be required to reduce the scope of its operations or anticipated expansion, and it may affect the company's ability to continue as a going concern."
The proposed ASX capital raising would have seen the number of Quickflix shares on issue more than double to around 3.4 billion. Quickflix shares dropped 0.1 of a cent to 0.2 cents -- a change of -33.33 percent.
The capital-raising effort comes as new research finds that Australians are spending more time watching regular TV despite the growing presence of tablets, smartphones, and laptops.
The average viewer spent about 97 hours per month in front of the small screen between July and September, according to a report from Neilsen and OzTAM.
That's consistent with the average over the last decade, and about an hour more than during the same period last year.
People spent about 7.5 hours per month watching videos on PCs or laptops, two hours watching on smartphones, and about one and three quarter hours watching on tablets.
"Television is still the centrepiece," said OzTAM chief Doug Peiffer, whose organisation directly monitors the viewing habits of 3,500 households.
Broadcast TV is facing increasing strain, with the arrival of internet-era streaming services such as the soon-to-be-locally-launched Netflix.