When some of the biggest names in Hollywood and Wall Street linked arms with some of the best-known business executives and tech firms, it looked like their plan to become the Netflix of mobile streaming – with bite-size TV and film content designed to appeal to viewers on the move – would be a sure-fire winner
Barely six months after launch, Quibi, named after the “quick bites” of content of less than 10 minutes, has become the first casualty of the streaming wars.
A little over two years ago, Quibi attracted $1.75bn (£1.34bn) from a who’s who of investors clamouring to get on board of what was hyped as the next big thing.
The brainchild of the hugely successful Jeffrey Katzenberg, the co-founder of DreamWorks, with the former eBay and Hewlett Packard boss Meg Whitman as chief executive, Quibi looked like a no-brainer.
Backers included all the big Hollywood studios, Goldman Sachs, JP Morgan Chase, Google, Alibaba, the billionaire Carlos Slim, and even ITV. “[Quibi] brings together the best of Silicon Valley and Hollywood,” Katzenberg boasted. “What Google is to search, Quibi will be to short-form video.”
However, since launching in April, Quibi has floundered and Katzenberg has consistently blamed the coronavirus for its underperformance. While there is no doubt that a business targeting mobile on-the-go consumption was always going to be hamstrung with millions staying at home because of lockdown restrictions, many questioned Quibi’s model from the start.
“The pandemic gives them a good excuse for their failure, but I think the real problem was that the idea of episodic content in five-minute chunks isn’t what people are looking for on their smartphone,” said Jim Nail, principal analyst at Forrester Research.
Quibi spent a fortune luring star names, from Jennifer Lopez to Steven Spielberg, to create content for the platform. Season budgets hit as much as $15m, the most expensive series clocked in at $100,000 a minute, and Reese Witherspoon was paid a reported $6m for voiceover work on six-minute episodes of a nature series.
They built it, but people did not come.
From its 6 April launch, Quibi failed to hit subscriber targets, garnered negative reviews and became embroiled in a mobile technology patent infringement lawsuit financed by the hedge fund Elliott Management.
Earlier this week Quibi had just 500,000 subscribers willing to pay $4.99 a month with ads, or $7.99 without. The business had quickly amassed more than 7 million after launch, although many of those were attracted to a 90-day free trial.
“Quibi is not succeeding,” Katzenberg and Whitman said in an open letter that announced the shutdown. “Likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service, or because of our timing.”
One of the problems of the business model is that it simply failed to deliver content in a way people that want to consume it. Bite-size content tends to be the domain of free, mostly user-generated, models, such as Facebook to TikTok.
Paid content models, from TV to Netflix, work because consumers want full-length programmes and films. Quibi tacitly acknowledged this with a belated attempt to get the app on to TV platforms including Amazon’s Prime Video and Roku.
“People want the six-second dance moves on TikTok or an influencer video on YouTube or Instagram,” said Nail. “When they want highly involving, high-production content, they want it on their TV screen in 30-minute or longer chunks where they can lose themselves in the story and escape from the craziness that is 2020.”
Even Quibi’s last-minute effort to find a buyer were scuppered by a flaw in its model, with talks reportedly held with companies including Apple, Facebook and NBC Universal, because it allowed rights to shows it funded to be owned by the content creators. In recent years Netflix has shifted billions of dollars of content budget to making original programming to ensure that it can maximise income from its content.
Quibi may be the first to fail, but it will not be the last, and it will provide a cautionary tale to the glut of services attempting to tap into the streaming boom.