Quickflix Restructures Debt, Cuts Costs: Over 20% Of Workforce Axed
Quickflix has additionally advised that it has secured an “in-principle agreement with three other major studio licensors for the restructuring and release of a further $4 million in commitments”, pending final documentation.
“The company has submitted proposals to other licensors with whom it has SVOD commitments for restructuring and release of debt and has been granted forbearance whilst it seeks to finalise agreements,” Quickflix stated in providing an update on the restructure, originally announced on August 31.
Meanwhile, Quickflix states it has identified cost savings of $4 million per annum across its operating and investment areas.
Staff cuts have resulted in a 33 per cent reduction in staff costs, equating to $1.7 million per year once complete, Quickflix advised, while additional initiatives have seen savings achieved across call centre support, corporate overhead, technology development and infrastructure, content management and marketing of approximately 18 per cent or $2.3 million per annum.
New revenue opportunities are additionally being explored, with Quickflix stating it has reached agreement to enter affiliate arrangements with SVOD operators in Australia and New Zealand, with Quickflix to introduce a special SVOD offer to its customers and derive a fee for sign-ups to the offer.
“It is intended that the SVOD offers will be complementary to the company’s existing customer offerings,” Quickflix stated.
The restructure comes as competition in the local SVOD market intensifies, with US streaming heavyweight Netflix having built up strong momentum since its arrival earlier in the year.
Roy Morgan Research figures released this month show that Netflix can now be found in 10.5 per cent of Australian homes, reaching 2.63 million Australians.
Quickflix had announced that it had entered into a non-binding memorandum of understanding with a Shanghai-based film and television company to combine their businesses, forming a global streaming platform for distribution of Chinese film and TV content, at the beginning of August.
However, later in the month advised that, based on due diligence of the company and advice received in regard to Chinese regulations and restrictions, it had decided that it would not pursue the acquisition.
Quickflix will remain in voluntary suspension until finalisation of the restructuring program and lodgement of its outstanding 30 June 2015 annual financial statements.