SmartCompany50 rank: 8
Revenue: $3.08 million
Growth: 99.6%
Founders: Stephen Langsford, 45 Simon Hodge, 39
Based: Western Australia
Employees: 40
Industry: Cultural & recreation
Website: www.quickflix.com.au
No one really likes visiting the local video store. The typical one has about 2000 titles, involves a trip in the car, deadlines for returns, late fees, and personal assistance if you are lucky.
But $1 billion a year is spent in video stores and in 2003, Stephen Langsford and Simon Hodge decided to get a share of it. They saw the success of renting DVDs online and set out to become Australia’s leading online movie company.
The company cost millions to set up, (losses in 2005-06 were $2.6 million) and growth was slower than anticipated. In the first few years it ran out of cash and was stretched to the brink. “I’m sure many thought we would not survive,” says Langsford. “But we kept listening to customers and persisting.”
Rich friends came to their aid and Lachlan Murdoch took a 9.6% stake in the ASX-listed company, which he has since swapped for a share of music and online marketing company Destra. The deal raised Destra’s stake in Quickflix from 11.4% to 19.9%.
Within 18 months the company had passed the $1 million revenue mark and now has $3 million revenue and almost 20,000 customers who, from their homes or offices, can select from 27,000 movies, TV series and documentaries. Movies are delivered via Australia Post and there are no late fees or deadlines. Titles are recommended to match your profile.
Its online subscriber base grew 100% in the last year, and 200,000 have subscribed to the regular movie newsletter. The company also uses affiliate, search engine marketing and optimisation.
The pair want to introduce videos on demand and expand into games. They are also planning a major national marketing campaign with partners. Regional media company WIN is an investor and promotes Quickflix to regional Australia. They have also struck a major marketing campaign with Woolworths.
There is no doubt that consumers are moving from free-to-air TV to the internet and DVDs, Langsford says. He expects Quickflix to follow the trend of online DVD rental company Netflix in the US with 7% of households subscribing (20% in San Francisco). “Video stores are closing: in 1992 there were 3000 and now there are 1300,” he says. “Less people are going to the cinema, preferring to watch movies at home on their home movie entertainment systems.”
Key success factors:
- Look for a trend and examine how the new players in overseas markets are responding.
- Take on major distributors as investors
