Quickflix seeks to keep Netflix out of Australia

Quickflix upgraded its online payment system in three months to prevent hacking threats and solidify its position as a leading digital video subscription service in Australia and New Zealand, the company's chief innovation officer, Tim Parsons, said today at the CeBIT Future of Payments conference in Sydney.

Quickflix is a subscription service that ships DVDs and Blu-ray movies, and streams digital video in Australia. It also recently launched a streaming service in New Zealand. In 2011, Quickflix began adding streaming video support for smart TVs, Sony PlayStation 3, the iPad and other consumer electronics devices, and it has plans to soon support the Microsoft Xbox 360.

"We're trying to move as fast as we can because we're scared of these other big competitors and we're scared of people like [the US company] Netflix ... who might be coming to Australia," Parsons said. "We want to make sure that when they turn up they realise we're in all the key devices in the premium positions - contractually agreed with those device manufacturers - and have all the different pieces in place like PCI compliance ... so they say, 'That's not really worth it.'"

Quickflix hopes to follow the example of Trade Me in New Zealand, which successfully warded off a challenge from eBay, Parsons said. He said everyone thought eBay would "crush them", but "eBay took one look at the local Trade Me business and [said], 'Too hard, we're out of here'".

In upgrading its payment system, Quickflix hoped to ward off threats to its business, including technical, operations and hacking threats, he said. "We recognised that we weren't really super comfortable" about preventing an event like the one Sony faced when it lost tens of millions of credit cards. "That's a brand that's pretty bulletproof, but if Quickflix lost two credit cards we'd probably be gone."

Quickflix partnered with IP Payments to develop payment gateways for various devices and the Web, Parsons said.

Maintaining a consistent look and feel to payment gateways across the Quickflix website and device apps was critical to making customer comfortable, he said. For device apps, the challenge is doing that on "someone else's infrastructure", he said.

Also, the migration process had to be "completely invisible" to the customer, Parsons said. The company has 100,000 paying customers, "and we just didn't want any of those folks" to receive a "weird message" telling them that they had to upgrade their account, he said.

Complicating matters further, the company had to migrate multiple credit cards per user and support multiple currencies.

"We pulled it off in three months," Parsons said. Quickflix started talking about the upgrade in November 2011, decided to do it in March 2012 and rolled it out by June. The company has run 600,000 transactions since turning on the new system and migrated 180,000 cards "without any downtime", he said.

The company's upcoming move to Xbox 360 presents new payment challenges, Parsons said. "Xbox 360 won't have on-device payment, but it has all sorts of opportunities like that in it, and of course customers who sign up through the web for an Xbox 360 account need to be able to transact using that PIN system for [transactional video on demand] and other products." That will run on off-site IP payments and credit card storage infrastructure, he said.

Quickflix has convinced 30 per cent of its DVD-through-post subscribers in Australia to switch or additionally subscribe to streaming services, Parsons said. "What will push people over is catalogue depth." Quickflix has 55,000 titles in its DVD catalogue but only a subset are available through streaming. "There's a lot of legal relationships" to cut through in Hollywood and studios are "good business people", he said. "You've got to be careful, because they'll take your money. So you need to make sure your business model will scale, so if you're paying more money for the content - as in millions of dollars - you need to make sure you'll get it back at the other end."

Another problem is each major studio has "lots of little ones underneath it that are actually doing the delivery of the files," Parsons said. "In some cases we get tapes. In one instance we were told, 'Rip the Blu-Ray.'" It's an industry that's "still in transition," he said. "They're being very careful to protect their existing revenue base ... and at the same time they realise they have to come up with something very credible."