Online film and TV show rental service Quickflix is in trouble. In the past two days its chief executive, along with several directors, have resigned in a massive management shake-up and talks are still ongoing to help prop up the company’s funding.
Reports also suggest executive chairman Stephen Langsford is considering taking the company private.
In a statement, Quickflix said “negotiations continue with regard to the future funding of the company”.
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“The directors and management are currently pursuing several options and working through a restructuring plan to reduce costs and capital requirements.”
The suspension is likely to remain until November 29, it said. Stephen Langsford was contacted this morning by SmartCompany, but a reply wasn’t available before publication.
It’s a curious development. While Quickflix has never turned a profit, its fortunes seemed to have changed in the past 12 months with an investment from American television giant HBO and content deals with major studios.
But the signs are clear Quickflix is in danger.
Shares in the company were put into a trading halt on November 13, and changes to the board were announced three days later when HBO’s representative, Henry McGee, stepped down. And on Tuesday, Quickflix announced chief executive Chris Taylor would be stepping down in March, with Langsford set to replace him.
Taylor, who had previously been the director of Telstra media, was only appointed in July 2011. Deputy chairman Justin Milne, also a Telstra veteran, has resigned. Non-executive director Susan Hunter has stepped down too.
Langsford has told The Australian that while taking the company private “is an option…I don’t want to lend a positive view that it would be a likelihood”.
“We are working through all the options. We’re not losing sight of the fact that Quickflix has a sizeable customer base and run-rate revenues and there is a lot of value there to protect and to build on.”
Langsford has often contrasted that large customer base against Quickflix’s inability to turn a profit, even after eight years in trading.
Most recent sales figures show the company recorded a $13 million loss for the 2012 financial year. Subscriber growth, on the other hand, has been strong with a total nearing 200,000.
The company has succeeded in getting its brand on several content distribution channels, such as Sony televisions, and the Xbox game console. Content deals have also been strong, especially after HBO’s $10 million investment. But the company has lacked the ability to offer digital streaming of newer titles, which may have held it back.
This liability has prompted media experts to point out the Australian market is ripe for a large content distributor like Netflix to challenge local players.
Shares in Quickflix have fallen 29% in the last year, last trading at 5.6 cents.