Quickflix and Presto deal collapses

The total number of customers declined by 14 per cent to about 121,000, while operating and investing expenditure decreased by eight per cent to $5.3 million. But as the Australian streaming space heats up, the Asian market could well be the lifeline that Quickflix is looking for in a bid to diversify. Revenue was down 15% to $4.2 million.

The cash-strapped company this week reported a drop in subscribers of 13 percent for the last quarter to June 30, which it blamed on the entry of Netflix into Australia in March and the increasing competition amongst SVOD players Down Under in recent months.

Today’s ASX announcement emphasises how the Chinese content company is “profitable and generates free cash-flow”. Consolidation with Quickflix would result in the combined entity having a significantly improved financial outlook and ability to access further capital for growth. Netflix doesn’t really need to, unless it plans to simply cut the company out of the market altogether.

According to Treasurer Joe Hockey, this measure would raise AU$350 million over four years.

The news emerged shortly after Quicklflix revealed deepening losses and the cancellation of an important content deal with Presto, a rival online video firm backed by New Corp.’s pay-TV operator Foxtel and Seven West Media.

“The government’s move to enforce GST for the supply of digital content services is the right one”.

Combining the two businesses will be a significant opportunity to unlock value in Quickflix, the statement said.

“The introduction of this legislation will not only help to maintain consistency across the competitive landscape, but it will also ensure that Australia gets its due taxes from the companies that choose to do business here, which benefits all Australians”.

“The impact of Netflix’s arrival was largely felt at the beginning of the quarter, underscoring the effect of the pent-up demand at the time of launch”, Quickflix’s latest quarterly update states.