criterion (australian) and insider(the age), page-22

As an Australian non-resident investor, based in New York, I would like to weigh in on the discussion with my own personal experience using Netflix, Hulu, iTunes (for iPad), and Vudu on a Samsung Internet TV. I recentl stopped using cable as the content is much richer online in any case. This experience I don't this is so different to the Australian market now, or in the not too distant future, so it may help inform the wider context {I do come back for about four weeks a year to Melbourne]

Demographically, I am in my mid-40s and would be considered middle-class in the US. Hypothetically in my mid-30s I may have been an avid user of BitTorrent and the like, however the practice of piracy is a pain, which includes viruses, low-quality films, the need for storage space etc....plus, not that is of big concern, but I no longer think the risk reward piracy for anyone in a professional capacity is worth it.

The argument on this forum of Quickflix versus Apple versus Foxtel is not straightforward as it seems. In the US, and I am not alone, some users subscribe to multiple media services. For instance, I mostly use Netflix because of the size of the library, usability of the interface and costs. However, sometimes I will use Hulu to watch a TV episode, or Vudu to watch a film not on Netflix. Hulu is free, with ads, whereas Vudu is pay per view (mostly). I also use iTunes for my music after swithching to iCloud and iTunes-Match (which 'hypothetically' converted 'pirated' music to a standard high-quality format), as well as the odd movie or TV series for when I am travelling for business internationally. When I travel within the USA, I stream content onto my iPad from Netflix.

I am convinced that there is space for multiple providers of different content streams in Australia. One provider dominates the market (although ACCC may have some issues with this). I even see a benefit from non Quickflix subscribers using another online service for their internet TVs. Quicklflix needs to see a increased uptake in Internet TVs, as once people are using them, then it will be easier (which is different to being easy) for them to access Quicklfix.

There has been discussions on this forum on the cost of the services. In the US market, the overall cost per month for me is around US$30, plus US$40 for broadband. Prices, I assume are similar in Australia, but even if they are not, I don't imagine them to be so different or relative terms. How affordable Quicklfix and Internet TV is for an Australian family depends on income and spending patterns, however it is certainly within the range of most people (including my mother living on a single pension who subscribes to Quickflix).

On the impact of the 'economic crisis' on Quickflix raised on this forum (really? in Australia? the USA has double our unemployment. the lucky country!)...a contrarian view may argue that this works in Quickflix's favour as people forgo cinema and dining out for pizza and online movies....

I also believe that there is space in the Australian market for a number of competitors, each with their own comparative advantage (as the debate on this forum has shown). Given the 100k subscribers, and the income stream that it brings, I am convinced that more money will be available via a capital raising for Quicklfix (think HBO amongst others), which may dilute may small investment, but I can live with that. In the event that a capital raising was not on the cards, someone will buy the company. If it reduced advertising spend to a minimum, it could still be a going concern with additional incremental growth. The company has no debt, so a takeover at these prices is a relative bargain, especially for an established media company (or an aspiring new one).


The question for me is what is the value of the company and what is a fair target price, all of which depend on the growth rate and the ability of the company too grow on a sustainable basis (i.e. via debt or revenue). I don't have the answers, but what is guiding my decision to stay with QFX is my experience in the US. Given the board members and the management team, I think my investment has the potential to grow significantly (at least tripling my investment within a few years). There are risks, of course, these can be mitigated against.


In my opinion....