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Australia Video Meltdown: Presto to Close, Quickflix Sold to U.S. Investor

Consolidation of the Australian streaming video sector accelerated brutally today with announcement that Presto is to close down by January next year, and already struggling Quickflix is to be bought for $1 million.

Presto’s closure in January next year was announced on the company’s website on Tuesday. No explanation for the shutdown was offered. The company’s Twitter feed reminded users that it is not completely out of the game for a few months yet.

Presto had been jointly owned by News Corp.’s pay-TV group Foxtel and by free-to-air broadcaster Seven West Media. It was estimated to have less than 200,000 paying subscribers, ranking it third in the market. Presto was launched in the same month as Netflix 18 months ago.

A joint News Corp-Seven statement reports that Seven sold its shares to Foxtel before Foxtel decided to shut the service. Foxtel said that it will revamp its Foxtel Play service in December and that Presto subscribers will be invited to switch to that service instead. Presto will close completely by Jan. 31, 2017, it said.

Meanwhile the U.S.-based Karma group, headed by Eric Pence, has bought Quickflix, for $1 million. Shareholders will receive A$0.215 per dollar of their existing shares. Pence said that Karma will make available a further A$700,000 to keep Quickflix operational.

Quickflix, launched as a DVD rentals firm in 2003 before the streaming boom, had previously signaled difficulties and at one point appeared to have found a Chinese corporate rescuer. However, that prospect collapsed, and Quickflix went into voluntary administration in May this year.

“Quickflix has encountered corporate challenges and impediments in a highly competitive environment. As Administrators we have been able to continue trading the business since our appointment, reduce costs, retain value, keep employing the majority of staff, and conduct a global sale process,” said joint voluntary administrator Jason Tracy.

The Australian streaming video sector is dominated by Netflix, which launched officially in March 2015, having built up a significant user base by hooking into its North American by offering using VPNs or having users change the settings of their browsers.

Although a latecomer to the Australian market, Netflix offered a lower cost package than its direct Australian competitors, and forced price cuts by pay-TV groups. Estimates say that Netflix now has 1.9 million customers in Australia.

After the financial difficulties of Presto and Quickflix, Stan remains Netflix’s only serious rival in the Australian video sector. The company, which has an estimated 320,000 paying subscribers, is jointly owned by Fairfax Media and Nine Entertainment.

European pay-TV giant Sky, which is substantially owned by Foxtel’s parent 21st Century Fox, recently agreed to invest $45 million in South East Asian video streaming startup iflix.

 

 

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