The future of Quickflix is uncertain after the company entered a trading halt early on Wednesday, ahead of an announcement by the company regarding its streaming business.
The company announced the trading halt in a statement on the Australian Securities Exchange, "pending release of an announcement regarding Quickflix Ltd entering into a material commercial agreement in relation to its streaming service." Trading will remain on hold until the start of trade on the ASX on Friday May 15, or until the company releases a further statement confirming its next move.
Speculation is now mounting about the future of Quickflix streaming, with a number of options on the table including a potential buyout by a rival service provider.
Under such an arrangement, the biggest win for a new buyer -- especially a company already playing in the streaming space -- would be the acquisition of a captive customer base that has a proven willingness to pay for online content.
CNET understands that, although Quickflix has a large cache of content rights agreements on its books, including enduring deals for "Game of Thrones," "Mad Men" and "The Walking Dead," these content deals are not transferrable to a new company.
There are a number of buyers that could be lurking in the wings ready to pounce on the Quickflix streaming business, including the Foxtel-owned Presto, or Stan, the joint endeavour of Fairfax and Nine Entertainment. In June 2014,previously owned by US entertainment giant HBO.
Unlike rivals Presto, Stan and Netflix, what makes the Quickflix business unique is its split offering of both content streaming (available through subscription and a premium pay-per-title basis) and its legacy DVD rental service.
Established late in 2003, the DVD service has been the linchpin of the Quickflix offering since the company's inception. In July 2011, Quickflix announced a distribution deal with Sony that saw it officially begin streaming titles to Sony TVs and devices. Since then, Quickflix has expanded its reach and now streams to Smart TVs from all the major brands, as well as consoles, PCs, tablets and smartphones.
However, CNET understands that while the DVD business is still profitable for Quickflix, its streaming offering continues to struggle.
In its most recent quarterly results statement,and a total paying customer base of 123,553 -- more than 70 percent of which were accessing streaming alone or streaming alongside DVD rental. By comparison, industry estimates put the number of subscribers for Netflix in the same period at roughly 200,000 before the service had even launched in Australia.