Telecom New Zealand denies Quickflix investment report

A report that claims troubled online film and television service Quickflix has been thrown a financial lifeline by Telecom New Zealand is false, according to the telco.

A spokesman for the company told SmartCompany this morning it has not signed a deal with Quickflix, and that it has no intention of doing so.

This conflicts with a report published yesterday that claimed the telco was leading a last-minute bid to save the Australian company, which has suffered a board exodus and financial woes. The report also claimed Quickflix was provided with $8 million, with a further $2-3 million to be provided by shareholders.

Chief executive Chris Taylor along with several board members, including a representative of American premium television service HBO, have all resigned in the past week.

But as industry experts point out the Australian video market faces a number of challenges due to its small size, which will continue to put pressure on any leading players.

Piracy, digital competitors and the slow speed at which content is transferred from American to Australian shores have all been cited as major problems.

“Building the scale to run a business of this kind is hard,” says Telsyte research director Foad Fadaghi.

The company remains in a trading halt.

Executive chairman Stephen Langsford told SmartCompany this morning that he wouldn’t be able to comment on any deal. This comment came before Telecom New Zealand confirmed there was no financial deal in place.

The denial of a deal reinforces the tough position Quickflix finds itself in, as it attempts to become the country’s leading provider of online video services.

Quickflix has managed to grow a strong subscriber base of nearly 200,000 but has never turned a profit. As Foad Fadaghi explains, building a Netflix-like service in a smaller country is always going to be a challenge.

“Just look at the pay-tv market; we have one player, and similarly the free-to-air stations have been in place for money years.”

“The whole video market, combined with the size of the Aussie market, is a difficult proposition.”

Quickflix has spent a considerable amount of capital on content deals with major studios, attempting to beef up the amount of content on offer. It was successful – Quickflix streaming services appear on PlayStation consoles, Sony televisions and other living room products.

But capital isn’t the only problem, as Fadaghi explains.

“There are infrastructure challenges, issues around piracy. Quickflix has been in business for a good number of years, so obviously it’s facing some specific challenges.”

“And that’s not to say anyone in the same position wouldn’t be finding it difficult, either.”