Little known online dvd rental and movie streaming company, Quickflix (ASX: QFX), which has a market capitalisation of just $17 million, has teamed up with one of the biggest technology companies in the world to bring a new experience to Australian viewers.
Amazon.com (NASDAQ: AMZN) officially arrived on Australian shores last week with the launch of its e-book shop and Kindle store down under. It is a hugely successful company that boasts a market capitalisation of US$167 billion – bigger than Woolworths (ASX: WOW) and ANZ (ASX: ANZ) combined!
Amazon's tablets are dominating markets throughout the world and look set to do so here in Australia. Its deal with the tiny Australian movie company has been well received by investors who have sent its share price 13% higher in early trading.
The deal will allow Amazon's Kindle Fire to be preloaded with a Quickflix app enabling users to stream movies straight to their devices. Streamed movies are becoming more popular for Australian audiences and in the September quarter alone, the number of movies streamed from Quickflix grew 20%.
Quickflix founder and CEO Stephen Langsford said, "The Kindle Fire is the latest consumer device to feature Quickflix streaming… The more devices we add to our network the more convenience and choice we provide our customers and the more valuable our service becomes. We're literally putting movies and TV shows in the hands of our audience. The days of being dependent on the TV stations for whatever's on are quickly coming to an end."
Mr Langsford couldn't be more right. In Australia, TV networks are being forced to become more flexible and look at new opportunities to maintain their market share. Foxtel, owned by News Corp (ASX: NWS) and Telstra (ASX: TLS), is rumoured to have looked to team up with TEN Network (ASX: TEN) as it faces the threat of overseas TV giants entering Australian shores.
For example in the United States, Netflix (NASDAQ: NFLX) – the highly successful equivalent of Quickflix – has grown into a US$20 billion media giant that streams movies and television shows to over 40 million members in 40 countries worldwide. Together with its number one competitor Hulu, Netflix will seek to enter more markets throughout the world, disrupting standard free-to-air and pay TV operators that stand in the way.
Foolish takeaway
Quickflix has learnt from its mistakes. Instead of running itself into the ground with expensive marketing campaigns, it needs to focus on improving its steaming capabilities and bring awareness to the brand through the type of deals it has made with Amazon and TiVo in recent weeks. Quickflix has enormous potential but faces massive risks including those posed by Netflix and Hulu.
