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Struggling Australian SVOD company Quickflix announced Wednesday it plans to acquire an unnamed Chinese film and TV production company in a bid to boost its bottom line and expand its footprint outside Australia into China and other international markets.
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 among SVOD players Down Under in recent months.
The Australian Securities Exchange-listed company said its inked a non-binding Memorandum of Understanding to merge its business with the unnamed production outfit to “form a global streaming platform for distribution of Chinese film and TV content into China and international markets”.
The financial details of the deal depend on due diligence and regulatory approvals, with a further announcement expected by August 20.
“Quickflix has made a considerable investment over a number of years to create a leading scalable streaming platform supporting a wide range of major consumer devices,” the company said in a statement to the ASX.
“Combining the Quickflix platform with original content and accessing large global audiences represents a significant opportunity to unlock the value of Quickflix,” the company added.
The announcement of the deal comes a day after Quickflix said its agreement to become a reseller of rival streaming service Presto, which is jointly owned by Foxtel and the Seven Network, had been terminated as certain conditions had not been met.
In its financial update for the three months ending on June 30, Quickflix said the biggest impact had been from the arrival of Netflix, although local SVOD players Presto and Stan have also eaten into its customers base.
“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. .
The impact of the U.S. company’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 said but noted that consumers are still testing out multiple services, often through extended free trials.
For the June quarter total customers were 121,127, down 14 percent, while total paying customers were at 107,969, down 13 percent. Revenue decreased by 15 percent to $3.09 million (AUS$4.2 million). The company had cash at bank of $662,000. (AUS$900,000).
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