Quickflix losses deepen as Netflix Australia launch looms

Video-streaming service Quickflix more than doubled its first-half loss, reporting a net operating loss of AU$8.6 million for the six months ending December 2014, a 57 percent plunge from the AU$4.2 million operating loss it recorded for the same period the previous year.

The company reported AU$10.04 million in receipts from customers for the period, a 3 percent fall from the AU$9.77 million it reported for the corresponding period the previous year, while revenue from ordinary activities in the six months was up by 7 percent to AU$9.21 million.

Meanwhile, Quickflix's total operating costs for the half rose to AU$18.4 million, 34 percent up from the previous year's costs of AU$13.7 million, with the company citing write-downs of intangible assets, and increased investment in streaming content.

The Australian Securities Exchange-listed company's half-yearly results (PDF) come as it prepares for competition from Netflix, which is expected to launch locally at the end of March, and Fairfax and Nine's new streaming company Stan, which launched in February.

Quickflix said it achieved strong growth towards the end of the first half, with a record number of new customer signups in December 2014.

However, the company conceded that the revenue drop, which was 2 percent lower than the half-year period ending June 2014, was a result of lower customer acquisition activity replacing churn experienced in the early part of the period.

Quickflix customers totalled 136,370 as of December last year, of which 19,564 were trial subscribers. The company saw a 12 percent drop in trial conversions, to 42.7 percent, compared to the previous year's 48.6 percent conversion rate at the end of December 2013.

The number of paying customers at the end of December totalled 117,106, representing an increase of 15 percent over the prior 12 months, but down 5 percent from 123,000 at the end of June 2014.

By comparison, it has been widely estimated that Netflix, which is based in the United States, claims around 200,000 Australian subscribers despite not having officially launched in Australia -- with customers in the local market signing up to the service using a virtual private network to circumvent geo-blocking on the platform.

Quickflix, which like Netflix offers a streaming service as well as a DVD delivery service, said that over 69 percent of its paying customers are now opting for its streaming service, while demand for its DVD and Blu-ray delivery service is also strong, with over 64 percent of paying customers choosing this too.

One third of all Quickflix customers are now taking both the company's streaming and DVD services together.

In 2014, the volume of content streamed by Quickflix increased by almost 70 percent, the company reported, with customers registering almost 140,000 new devices for its streaming service, taking the total registered device to well over half a million.

Game consoles and smart TVs contributed the largest increases in streaming play volumes, with growth in mobile device registrations and usage boosted by the addition of Google Chromecast to Quickflix's device network, the company said.

Quickflix said that the second half has commenced with solid growth in new customer signups and upcoming partnership promotional activity.

Quickflix said it should benefit from a general increase in the awareness of content streaming in Australia that Netflix's local launch is expected to result in.

"In this environment, Quickflix will continue to improve its service for customers and deliver value for money," Quickflix told investors. "Initiatives include the addition of new features and TV series content, and ongoing improvements to the user interface for streaming and DVD customers."

With AAP