American television network HBO has invested $10 million in DVD and online rental business Quickflix, which says it intends to start ramping up its marketing efforts as subscriber growth continues to climb.
The announcement comes just weeks after Quickflix announced a partnership with HBO, which would allow the company to stream the network's library of television shows through its online rental service.
Chairman Stephen Langsford told SmartCompany this morning the deal comes after maintaining a strong business relationship with HBO's parent, Time Warner, for quite awhile.
"The investment just comes at a time when we are demonstrating very good growth, we've launched our streaming services with a number of devices and soon we'll be adding more studios and devices."
"The investment really allows us to execute our growth strategy."
The investment gives HBO 83.3 million shares, resulting in a diluted interest of 15.7%. HBO will present a new representative to the Quickflix board as a result of the deal, which is still subject to shareholder approval.
Quickflix has enjoyed a few quiet years of growth, but Langsford now says the marketing efforts will ramp up as subscriber numbers grow beyond 100,000. With the service now streaming over Sony and Samsung devices, Langsford says the subscriber base is ready for more streaming services – a strategy which can now be assisted by the new investment.
However, Langsford wouldn't comment on whether the move is an attempt to hedge the company's bets against the future entrance of an international player, such as Netflix, which is the leading provider of streaming services in the United States.
"We feel this is a great opportunity on the IPTV wave, to have the support of a media entertainment icon. It's the largest premium television network in the United States, and it's great to have that support.
"This provides a great level of funding to execute our strategy. On top of the growth we've already seen, it's a great opportunity for us."
Although HBO has made content deals with other service providers, it is rarer for the company to make an actual financial investment.
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