Quickflix suspends trading on ASX, again, amid talk of potential insolvency
Quickflix has suspended trading on the ASX for the third time in recent months.
The streaming video on-demand (SVOD) and transactional video on demand (TVOD) company, which operates across Australia and New Zealand, says it requested the trading halt ahead of a restructure announcement.
Its ASX filing implies the company promised minimum payments to TV and movie makers to secure rights to their content but now doesn't have enough cash to meet its obligations. It says these legacy deals are hindering its right to arrange new funding. Quickflix is currently in negotiations with licensors to "seek relief from existing obligations" so it can "continue to be a distribution channel for their content and providing competition in the marketplace."
Australian trade site Mumbrella describes it as an attempt to head off "potential insolvency."
It's certainly in a tough bind in a market that's growing fast but also becoming increasingly expensive to play in as new arrivals bid for content rights.
Quickflix's second quarter report revealed a 14% drop in customer base to 121,127 for the quarter and a 13% quarter-on-quarter decrease in paying customers, to 107,969.
Revenue dropped 19% against the year-ago quarter and 15% over the previous quarter to $A4.23 million.
The launch of Netflix in Australia and New Zealand earlier this year, and an attendant jump in free trial deals, was blamed for the slowdown.
The company did not supply a profit/loss number but said it had -$A1 million cashflow and $A913,000 in the bank – or enough for one more quarter at its current burn rate.
Quickflix trading was also suspended earlier this month as it negotiated a deal with an un-named Chinese media partner which was ultimately never consumated.
In May, Quickflix also halted trading before the announcement of a content partnership with Presto (a Foxtel-Seven joint venture). That deal also collapsed at the last minute.
The SVOD and TVOD markets are proving tough.
Last week, Video Ezy shut down its online service. And even giant Netflix, while raking in the revenue, only makes a profit courtesy of its legacy DVD rental business.
None of the ANZ players have released any subscriber numbers but surveys in New Zealand and Australia have put Netflix well ahead of the pack. In Australia, a recent Roy Morgan survey estimated Netflix was in 737,000 Australian households in July, reaching about 1.89 million people. All other streaming services combined reached 177,000 households.
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