Why Nine’s investment in Quickflix makes it tougher for Netflix to launch in Australia
Last week Nine Entertainment Co made a $1m investment to buy eight per cent of streaming company Quickflix, whilst preparing to launch its own operation StreamCo. Here Nic Christensen looks at the underlying reasons for Nine buying into a rival.
In the world of video streaming last week’s investment by Nine into rival Quickflix did not go unnoticed, but as always with these deals the devil is in the detail. In this case, a series of warrants and covenants that came with this batch of shares.
Predictably, in the wake of the announcement, speculation quickly followed that US streaming giant Netflix would also seek to invest in the long troubled Australian video service Quickflix. However that theory was quickly scotched. And with good reason.
The history here is important. The 83 million preference shares in question were previously owned by content partner HBO who amid a cashflow crisis in 2012 chose to step in to save Quickflix.
Whatever happened to bigpond movies? Weren’t they supposed to take over streaming video in AU? Oh the irony if T did invest in quickflix…not under the current CEO anyway. Really T should be doing what BT are doing in UK now but their mobile focus and leadership model really doesn’t allow for deep expertise anywhere other than enterprise services.
@gone missing
They have over 500,000 tboxes in market streaming movies and TV either on a pay per view or subscription basis.
So rather than going missing they are the quiet achievers.
Puts the 50,000 quikflix and ‘200,000’ Netflix subs into perspective.
When I discussed the Australian market with Reed Hastings the CEO of Netflix at CES 2014, he said that the only thing stopping him from coming into the Australian market was the high price that Hollywood Studio’s were trying to charge for content. I am told that this issue is now solved.
In reality Netflix only have to announce that they are launching in Australia and they will get a lot of publicity along with more than 30 vendors who want to put the Netflix download app on their TV’s tablets, smartphones and PC’s.
I think the Quickflix issue is a side issue for Netflix, the interesting battle is the suggested relationship between Fairfax and Nine.
@Fred the T box is an OK PVR and has grown slowly given its been in market nearly 5 years now – not sure about the streaming numbers though…care to share? Anyway the point is that BP Movies are conspicuously absent from AN Y serious discussion around the future of streaming in AU. if they have some good numbers to share then their PR needs to wake up.
Great journalism.
Great leadership.
You mean to say “enter the market …officially” right?
https://getpocketbook.com/blog/netflix-australia-2-stats-scare-local-players
If it’s true, that is a genius strategic move. Look forward to seeing how it pans out.
So Nine can force an “event”, then pick over the carcass, and pick up a potential $10 million (plus the cost of the shares), and take out an established streaming competitor, all for a measly $1 million? Reads like a master stroke if that is the case.
Obviously don’t think netflix is coming to Oz anytime soon
@Matt etc…so this puts a higher price on Netflix buying quickflix ….but why do they need to in order to enter the market here? Heaps of ppl already use it so the tech and brand is in place all they need to do is address the licensing and lift the geo blocks and BANG it explodes to dominate (caveat below re HBO availability).
So it comes down to whether the quickflix deals are transferable in the event of change of control (Lambo?) and at $11.5m plus price of the rest of the shares they’d need is that a good deal wrt licensing MGs or not?
But really the key insight here is why would HBO sell their stake when in fact their programming is a key driver of Netflix success. The answer I reckon is that they’ve sold exclusive rights to Foxtel so they know that there is zero chance of netflix, quickflix or anyone else getting hold of their content in AU and hence severely denting the chance of these things getting significant traction.
So where is the ACCC in all this? Why is Foxtel allowed a monopoly on HBO and first run BBC programming and goodness knows what else soon. It is a big deal when it comes to what consumers actually want and AU moving into the 21st century media environment.
That is something for Mumbrella to get its teeth into (and more substantial than throwing well deserved rocks at crappy self serving awards anyway!)
I’m not clear on why HBO would sell those shares? They don’t need the money and getting a $10+ payday on a takeover would be an appealing return for anyone. Guessing Streamco have signed a nice deal with HBO for their content and this is a little bolt on to help Streamco out.
Buried the lead needs to look up the meaning of monopoly. It’s not like one company owns all of the steel or coal. First, broadcasters do content deals all the time, including FTA. Second, HBO content is available via Google Play, itunes, and DVD. That’s not a monopoly, it’s a free market and Foxtel did the deal.
Hey people. Let’s all be clear here. Streaming is completely price led. When someone like Dendy announced (again) this week a bespoke streaming service with prices around $6-7 per movie, how on earth are they going to compete with a $7 per month streaming service offered by Netflix with far more breadth. Whether any of the Australian players like it or not, consumers are ONLY price led on this. They’ve completely shunned the video store, Hoyts and VideoEzy rental boxes are struggling and Foxtel market share has only just returned to its 2010 peak. Netflix doesn’t need to enter the Australian market. it’s here. Here’s why: When at least two people told me at children’s birthday party recently they’ve shut their Foxtel account and then went on to say how easy it was to set up a Netflix account, you know the game is up.
@buried the lead et al, just to clarify one point you seem mistaken on, Netflix DOES NOT have HBO content in the USA, so HBO programming is NOT a key driver of Netflix success in the USA.
HBO content is not available on any independent streaming service in the US. It is only available on HBO GO, HBO’s own streaming service, and you need a cable subscription that includes HBO to gain access to HBO GO.
Any HBO may enter the AU market themselves, as a stand-alone entity via their HBO GO product.
http://online.wsj.com/articles.....1407106582
HBO paid $10M for their investment in Quickflix, they recovered this when Foxtel paid $10M upfront for the rights to Game Of Thrones.