DVD movie rental company Quickflix may be buying Telstra BigPond’s DVD snail-mail rental business (CDN, yesterday), but the company plans to begin an online movie delivery service before the end of this year, former Telstra BigPond chief Justin Milne said last night.
Milne, who had masterminded the BigPond content business, resigned from Telstra in an apparent huff in March last year after being effectively demoted, finding that rather than reporting directly to CO David Thodey, he would in future report to chief marketing officer Kate McKenzie.
After lying low for 15 months, Milne yesterday re-emerged as deputy chairman, and co-mastermind with founder/chairman Stephen Langford, of ASX-listed – and loss-making – Quickflix.
He told ABC-TV’s Lateline Business that Quickflix aimed to build a business offering both mail delivery of DVDs and an online service. He said this would differentiate it from BigPond – which aims to go online-only – and possible US-based newcomers such as Hulu.
Under the deal announced this week, Quickflix says BigPond DVD customers will be offered the chance to transfer to its DVD rental service. Quickflix will make a variable payment to Telstra based on the number of customers who transfer.
Quickflix will also acquire BigPond’s library of 44,000 DVD and Blu-ray discs and equipment for an undisclosed sum. They join QuickFlix’s current library of 50,000 movie DVDs and videos – though presumably many titles would be common to both libraries.
The company would need to negotiate separate arrangements with movie copyright holders for its planned online delivery. It could also find itself fighting future competition, not only from Telstra, but also from potential online services from Apple – which has already launched an Apple TV service in the US – as well as Google and possibly Facebook.
Quickflix claims to have 64,000 paying subscribers for its current DVD home delivery service, but has found profits elusive. It made a net loss of $3 million on turnover of $7 million in the year to June 2010, and a further $2 million loss has been estimated for the year just ended.
Earlier this year it scored a multi-million dollar investment from Guaranty Finance Investors (GFI), a San Francisco based investment fund. Along with Milne, GFI principal Donald Campbell has now been added to the Quickflix board.
Other main investors in Quickflix include Stephen Langford and WIN Television. Lachlan Murdoch at one stage held 12.5 percent of the action, but no longer appears to be actively involved.
