Quickflix is the closest thing Australia has to a Netflix competitor, but setting up a system to stream movies isn’t cheap. Quickflix has actually been suspended from trading since mid-November while it seeks new investors. In a market update today, it revealed an interesting factoid: merely acquiring a new customer costs it $60, which means you’ll have to be using its $14.95 a month WatchNow service for at least five months before it makes anything at all.
That cost largely comes from advertising, according to the statement:
Cost of customer acquisition in FY12 increased to $60 per customer from $31 per new customer in FY11 as a result of increased investment in brand and traditional media. For an outlay of $4.0 million in FY11 Quickflix acquired 130,000 trialist signups whereas for an outlay of $9.8 million in FY12 Quickflix acquired only 160,000 trialist signups.
Ouch. Quickflix has also spent lots of money on ensuring WatchNow works on a range of platforms, including consoles (the Xbox 360 and the PS3), smart TVs from Panasonic, Samsung and Sony, and tablet devices from Apple and Samsung. In the future, Quickflix says add additional device support “will be limited to those new devices with a quick payback”. Apparently, one of the devices Quickflix sees as offering a quick payback are BlackBerry 10 handsets; it was announced as a major partner at the BlackBerry Jam development conference in Bangkok today.
It’s generally agreed that affordable legal options are one of the few ways to combat piracy. As such, no-one in the content creation business wants to see businesses such as QuickFlix fail, but the road ahead looks anything but certain right now.