The online rental company appointed Hannah Schwartz (RSVP.com.au, realestate.com.au) to this new position to drive subscriber and revenue growth.
The appointment is part of the company’s strategy to dominate online distribution in physical and download formats in Australia.
Executive Chairman Stephen Langford told Encore that Quickflix has experienced growth at a time when video rental stores and DVD retail sales are declining – a trend identified by a recent report by analyst IBIS World.
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Although the Australian Video Rental Retailers Association (AVRRA) sustains that video stores have experienced six years of continuous growth, Langford believes traditional stores don’t have such a brilliant future.
“Traditional rental stores are in long-term decline and I don’t think anyone can refute that. It’s happening quite obviously in the US, the UK, and also in Australia. You see the ‘rationalisation’ of existing video stores, and back in the 90s there were 3500 K video stores and the number is down to 1500,” he said.
In the rental industry, Langsford sees two transitions: from offline (Video Ezy, Blockbuster, etc.) to online stores, and then from physical media to digital downloads on demand. The first is currently taking place, as the December 2009 quarter saw a 13 percent increase in subscribers for Quickflix, reaching 41,027 after intensive promotional initiatives that included Christmas cards for existing customers to send to their family and friends.
“Part of our strategy is turning our subscribers into strong advocates of our brand. Besides, there is no stopping consumers moving from offline to online, because it provides more choice and convenience.
The company’s current model still relies on online rental of physical formats – DVD and Blu-ray – but Langsford views download as a growing service.
“Download is still minuscule, but we think it will be embraced by the Australian market once hurdles such as broadband access, cost, speed and quality of service are overcome. Another issue is that DVD is still the first window and the dominant medium driving revenue profitability, so you won’t see the studios making all content available digitally, because that might impact their existing revenues,” he said.
According to Langsford, the main lesson Quickflix has learned from the experiences in countries where download services are more developed, is to stay close to the customers and build their customer base before digital delivery becomes a true commercial proposition.
“They want entertainment content, they want to relax and enjoy it. They don’t’ care about the technology. It’s about compelling content. Downloading and streaming needs to be straightforward and simple, and when that happens, that’s when we know that consumers will embrace it. In the meantime, what we have is an opportunity to develop a brand and a big subscriber base, and extend our range of content from 38,000 titles to 100,000.”
For this purpose, Quickflix has made other recent appointments which include Michael Snow as head of content in Sydney and Dr Tim Parsons as head of product development and technology.