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Online DVD rental company Quickflix has reported a 27% increase in revenue to $3.2 million for its first half year results to December 2008, following the delivery of its five millionth movie.
Despite tough market conditions the company,which has struggled with a languishing share price and capital raising challenges,has consolidated its position reporting a net operating loss of $1.1 million, down 62%. Membership for the mail delivered DVD service was up 28% with customer churn down to below 5%.Operating costs were contained to $4.3 million down 22%.
OnDecember31,2008, Quickflix had 25,565 paying subscribers, up 28% over the yearwith2200consumers on a trial run.
Stephen Langsford,Quickflix founder and executive director,said the economic downturn was providing a strong opportunity for growth for the home entertainment market.“Traditional retailing and bricks and mortar businesses will be the losers in this shift in consumer behavior, whilst Quickflix and other internet based businesses offering superior choice and efficient delivery will be the winners,”added chairman Kevin Campbell.
Langsford pointed to the turnaround success of United States-based online DVD provider Netflix which last week reached its 10 millionth subscriber, as a marker for where the Australian market may head. Unlike Quickflix, Netflix stock price doubled in the last three months,but like its Australian counterpart it has been derided for not moving to broadband based delivery fast enough. Netflix does have a limited“watch instantly“online service but it has timed its move towards streaming to come after the rise of Hulu and YouTube, while also waiting for higher penetration of fast broadband speeds.
Similarly,Quicklflix is maintaining that it will make the leap to IP distribution and despite the problematic NBN deployment. The company affirmed in its half yearly statement that it is in preliminary negotiations with parties to introduce a video on demand and IPTV service as an add-on to its online DVD rental model.
“It is not a big-bang approach but one designed to keep Quickflix at the forefront of technology. As a legal source of movie and TV series content Quickflix stands to benefit from the recent clampdown by major studios and content owners against illegal downloading inAustralia.”Langsfordsaid.
Hewould not be drawn on a date for the deployment but it is anticipated that the company will begin trialling IPTV services and technology within the calendar year.
