America’s largest premium TV company HBO has offered a $10 million investment for a 15.7 per cent stake in Australian IPTV and DVD rental by post company Quickflix. Quickflix went into a trading halt pending the announcement of a new equity investor, which some in the industry had expected to be Amazon’s UK IPTV subsidiary LoveFilms.

HBO, a subsidiary of the giant Time Warner corporation, source of popular shows like The Wire and Deadwood announced two weeks ago that they had licenced their content library to Quickflix SVOD 12-18 months after first run on TV.

The news also comes days after Quickflix announced their Q4 2011 results, highlighting that 10 per cent of their subscribers had taken up their new WatchNow subscription video on demand (SVOD) service, paying customers grew by 17 per cent to 94097 and churn was reduced to 4.4 per cent compared to 5.8 per cent in Q3 2011.

Under the terms of the agreement, HBO will invest $10 million in Quickflix in exchange for 83.3 million preference shares at a price of 12 cents per share. The preference shares are convertible to ordinary shares in the company equating to a fully diluted interest of 15.7 per cent on conversion. HBO will also appoint a representative to the Quickflix board.

Quickflix executive chairman and founder Stephen Langsford said the investment by a global media organisation demonstrates that the company was on the right track.

“We have been able to demonstrate good subscriber growth, positioning for what we see as a massive wave ahead for IPTV ahead and this gives us a great partner and funding to execute our growth strategy,” Mr Langsford told Technology Spectator.   

Since its launch in 2003 Quickflix has managed to keep growing its subscriber base and outlast all of its DVD rental by post competitors, acquiring Homescreen in 2005 and Telstra’s BigpondMovies in 2011. It also

It also hired the former head of Telstra BigPond JustinMilne in mid-2011 as its new deputy chairman and non executive director.

SVOD services like Quickflix WatchNow could reduce piracy of offering a relatively friction free method of watching Movies and TV at a fixed monthly fee.

The nascent Quickflix SVOD service was launched in late 2011 on internet connected Sony TV’s Bluray players and PS3 games consoles with the aim of offering 1000 Movies and TV shows to subscribers via broadband by Christmas 2012. A week ago Quickflix announced that WatchNow SVOD would also be available via Samsung internet connected TV’s, bluray players and Android devices.

Quickflix WatchNow is the only IPTV offering in Australia that is similar to the US based Netflix and UK based Lovefilm because it lets subscribers watch as much as they want for a flat monthly fee of $7-$14.99 depending on whether it’s purchased standalone or bundled with DVD rental by post.