Ann: Streaming Grew Strongly in September Quarter, page-9

It looks like the DVD business and revenue is being bastardised by the introduction of $9.99 streaming.
Wonder if QFX management have a plan to cut the DVD  business when it gets to a certain level of loss? Would be interesting to hear SL comments on what value the DVD business has in relation to supporting growth in the streaming business?. Will the supporting role keep the DVD part of the business going for longer or until streaming is self supporting?   
What is the magic number to shut down or off load the DVD side of things?
What is the magic number of streaming customers for profit?

I cant tell if the bottom graph is more spin, an indication of a failing business or very material to future growth and profit.
I think as streaming looks to be the future of content delivery it may be an indicator of improving business metrics in conjuncture with worsening financials. (When does this happen?) Is there a tipping point in the future when streaming contributes more to the business  than building it takes. QFX are unlikely to go broke as they have proven they can raise cash so my thinking is the graph is showing an improving business regardless of financial trend. Is that likely?


I'm a fan of the DVD post service but is it time to cut it? Will the DVD business have more legs purely because QFX are working to get DVD customers over to streaming without alienating them? Is it easier to get a new streaming customer from an existing DVD customer or have the majority of DVD customers that will swap already done it?

I put the number of customers with access to streaming at around 85,000,  @ 65% of overall customers. That part of the business seems to be growing exponentially.

If streaming grows at the previous quarter rate of 23% that would put customers with access to steaming at over 100,000. And the coming two quarters are seasonally stronger for growth. That's getting to be a serious number of streaming customers.

Below best case scenario base on 23% growth in streaming customers per month over the next 4 quarters.
Best case because I doubt 23% is sustainable and I expect more competition in Q4 onwards.
Also not all customers are streaming only customers so the numbers will be out. Just for illustration of growth potential only.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	streaming	Q1	Q2	Q3	Q4	Q1
1	growth rate	current	19550	24047	29577	36380
2	23%	85000	104550	128597	158174	194554
3	revenue
4	$ 9.99	$ 849,150.00	$ 1,044,454.50	$ 1,284,679.04	$ 1,580,155.21	$ 1,943,590.91

The left field play that may ramp streaming growth past this could be an actual partnership with a group that can access large amounts of potential new customers. Its what QFX keep spruking. Can they deliver?

71c4