Quickflix's Presto deal falls over but Chinese partner on the cards

There was good news and bad news as Quickflix emerged from a trading halt on the ASX.

The good, or at least potentially good: a memorandum of understanding with a Chinese film and TV content company to expand Quickflix into China and other countries. "Potentially" is the operative word here. A statement to the ASX doesn't name the company or what the deal could be worth and Quickflix declined NBR's request for further comment.

A Quickflix company statement does detail that the company is based in Shanghai, is profitable, and has a co-production coming up with a US studio. It will release more details on or before August 20.

The bad: Quickflix's partnership with Presto has fallen over. Presto is a streaming video on-demand (SVOD) formed as a joint venture between Foxtel and the Seven Network. Until a deal struck in May, Quickflix Australia was going to replace its streaming service with content supplied by Presto but keep its existing rent-or-own download service (Quickflix NZ would continue on as is).

In May, when the hookup was announced, Quickflix said it would take a few months to prep its interface for the arrival of Presto content – which would have widened Quickflix reach with TV series from HBO, Showtime, eOne, 21st Century Fox and a large selection of movies from major Hollywood studios. Now, it's not to be. The deal was terminated because unspecified terms were not met.

That darn Netflix
Meanwhile, Quickflix has attributed the arrival of Netflix in Australia and New Zealand in April for a dip in subs.

"Quickflix paying customers declined by 13% in the June quarter, impacted by the unprecedented level of free-trial promotions by competitors, including those associated with the official launch of Netflix in Australia and New Zealand. Pent-up demand for Netflix generated through media and other publicity ahead of its launch resulted in a spate of customers churning in April and May, and a challenging quarter overall for the company," Quickflix said in a statement.

In New Zealand, Quickflix has also had to contend with Spark making its Lightbox service free for 12 months for its 670,000 or so broadband customers, plus the launch of Sky TV's Neon.

Quickflix remains near the top of the heap in terms of multi-platform support (only Netflix support is available through more smart TVs and devices) and it has developed a decent spread of content. But this year it not only faces a more crowded market but also a proliferation of free-trial deals from rivals.

Losing customers
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 company did not supply a profit/loss number but said it had -$A1 million cashflow and $A913,000 in the bank.

Shares rose from 0.1c to 0.2c when shares resumed trading, giving Quickflix a market cap of $A4.6 million.

Quickflix's market cap peaked in 2012 at around $A70 million.

Netlfix drawing all the eyeballs
Although no contender has released subscriber numbers, surveys indicate Netflix is streets ahead of rivals in Australasia.

A Roy Morgan survey found Netflix steamrolling the competition:

Here, Horizon Research recently questioned its panel of 1486 adults (weighted to match NZ’s population) on their SVOD habits.

Extrapolating their responses to the population, the company estimates 220,000 New Zealanders are using Netflix – putting it streets ahead of rivals.

CallPlus earlier said Netflix NZ and Netflix US now account for 25% of its traffic. Horizon puts Quickflix on about 25,600 users, and Sky TV's Neon on 16,000 (Horizon did not collect a number for Lightbox).

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