Australian streaming video company Quicklix says it has called off a deal announced earlier this month to acquire a Chinese film and TV firm.
The cancellation is a further blow to Quickflix which is struggling to make headway in the newly competitive Australian online video sector, and follows the cancellation of a previously announced sub-distribution deal with Presto, a larger rival.
The move also follows last week’s closure of EzyFlix, another small streaming company seemingly affected by the arrival of Netflix in Australia. Netflix began operations in March and according to many estimates has already established itself as the market leader.
“Based on due diligence of the Shanghai based company and advice received in relation to Chinese regulations and restrictions, Quickflix has decided that it will not be proceeding with an acquisition,” Quickflix said in a statement on Monday.
“Quickflix recognizes distribution of content into China and of Chinese content to the rest of the world is a significant opportunity and it is continuing to develop a China strategy. Quickflix is also pursuing opportunities for licensing and operating its studio-accredited streaming platform as a branded or white-label service in other international markets,” it concluded.
The company announced on Aug. 5 that a non-binding MOU had been signed with a Chinese firm which it refused to name. At the time it said the potential Chinese partner “produces original Chinese language film and TV, participates in co-production in China and international markets and has a slate of future production including a co-production with a U.S. studio…. [and] is profitable and generates free cash flow.”
The company also said that consolidation of the Chinese company with Quickflix would result in the combined entity having a significantly improved financial outlook and ability to access further capital for future growth.
In its last financial report Quickflix acknowledged a drop in subscriber numbers and reported losses of A$1.1 million. It had less than A$1 million on hand, leading many commentators to believe that Quickflix is in serious trouble and that the Chinese deal would have been a rescue structured as a reverse takeover.
Rival Australian streaming company Stan has a strategic stake in Quickflix and the right to a A$10.5 million pay-out in case of a change of ownership.
Quickflix shares were down by 50% at A$0.001 apiece on Monday following the news.
“Thank you for having been a part of EzyFlix. Access Digital Entertainment has decided to end the service offered on this site,” reads a message on EzyFlix’s website.