Quickflix who has revenues of $5m a quarter reported a loss of $6.4m on revenue of $19m for the year to June 30.
The company which claims to have 110,000 subscribers - a number that has been disputed by one investor - has in the past 12 months parted company with several former senior management and board members including the recently appointed NBN board member Justin Milne. Also leaving the company is the former CEO Chris Taylor and the former Marketing Director.
Quickflix founder and Chairman Steve Langsford blames the cash burn on the advent of streaming and the need to invest in new streaming technology.
Quickflix which competes with Apple and Google could find himself competing next year with all of the free to air TV channels which are set to launch new IPTV services in Australia.
There is also speculation that Blockbuster which recently closed their store operations in the USA will launch a streaming service in Australia as demand for DVD content moves from store purchases to streaming. Also set to launch a video streaming service is JB Hi Fi which is having a lot of success with their MusicNow streaming service.
The JB Hi Fi services spanning music, movies and TV content are provided by US Company Rovi which is working with several major retail chains around the world to deliver movie and music content in competition with organisations like Quickflix.
Langsford told the Australian that the past 10 years have been challenging for his organisation.
"The decline of the bricks-and-mortar rentals is only increasing, but the DVD business is still a $1.5 billion-a-year market. So while there's no doubt that the market will contract in coming years, we plan to be growing the streaming business at that time and that's very exciting for us," he says. "The trick is to be sufficiently invested in the new technology without getting too far ahead of the customers' usage behaviours."
"Pay-TV folks like Foxtel struggled in the early days and so have we," Langsford says. "There have been times when it looked doubtful, a lot of red ink was spilled. But it's exciting because after all this time we have learned a lot, spent a lot and are getting close to perfecting the user experience with some great content."
But all of Langsford's hard work over the past decade nearly came undone late last year when overambitious marketing activity bled the company of cash and threatened its survival. That funding crisis led to the departure of its chief executive, Chris Taylor, and six board directors including current NBN board member and former Telstra executive Justin Milne.
Bleeding more than $1m a month, the company earlier this year initiated an emergency restructure that saw it shed one-third of its workforce, scale back advertising and close some of its DVD centres to preserve its cash position.