Quickflix has announced that it has reached ‘in principle agreement’ with major studios to restructure existing commitments of more than $5 million into debt, to be repaid over three years. Quickflix currently has distribution arrangement with a number of studios for subscription video on demand (SVOD) licensing arrangements.
The new arrangements grants the studios the option to convert debt to equity 'at some time in the future'. But on current performance, that equity will not be worth much.
“The successful restructuring is part of a process the company is undertaking with all its licensors as it moves to an SVOD reseller model,” said CEO and founder Stephen Langsford. “Under the model, Quickflix's cost base becomes mostly variable, including content costs which will no longer be subject to minimum guarantees that have historically impeded profitability.”
Langsford said the restructure of licensing commitments and adoption of the SVOD reseller model will significantly improve Quickflix’s operating margins and cash flow. “As an integrated reseller of SVOD, Quickflix can effectively compete with larger SVOD competitors leveraging its significant investment in its streaming distribution platform.
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Quickflix is available on more platforms than other Australian SVOD players, including game consoles. It also offering transactional streaming and online DVD rental subscription. On 14 May 2015 Quickflix announced on that it has entered into an agreement to resell Presto, though that has not yet been finalised.
"The restructuring of the Company's SVOD commitments is a major step towards repositioning Quickflix,” said Langsford. “Studios have been very supportive and are keen to see Quickflix continue to develop and become a strong and growing provider in the high-growth streaming entertainment sector.”
Quickflix has been struggling for years, and has put on a brave face as Netflix, Stan and Presto have entered the market. Its share price has been languishing and its market capitalisation is now less than$2 million, a price at which you must wonder why one of the big boys just doesn’t buy it and put it out of its misery.
It has invested far more than that amount in its delivery platform, and its 100,000 or so customers must be worth something.