It’s officially the end of the road for Quibi — a quick end for the quick-bite video startup.
The company, led by founder Jeffrey Katzenberg and CEO Meg Whitman, confirmed that it intends “to wind down its business operations and initiate a process to sell its assets.” The shutdown comes just a little over six months after Quibi launched in April, at the front end of the COVID pandemic’s sweep across the U.S.
Quibi determined that due to “the changed industry landscape and ongoing challenges, it was clear that the business would not be able to continue operating for the long-term on a standalone basis,” according to its announcement.
The end of Quibi will throw its approximately 200 employees out of work and leaves dozens of projects from partners in limbo. As of the third quarter, Quibi reached 710,000 subscriber households, according to estimates from research firm Kantar — down 300,000 from the prior quarter. The company had projected landing 7.4 million paying subscribers in its first year, the Wall Street Journal reported.
Following Quibi’s shutdown, the remaining funds in its coffers — from the $1.75 billion in funding it raised from Hollywood studios, tech companies and other investors — “will be returned to its investors as specified in the company’s operating agreement,” the company said in a statement.
Katzenberg founded Quibi on the untested theory that smartphone-toting millennials would eagerly pay for a premium mobile TV service that they could consume in sub-10-minute episodes. But Quibi failed to attract a sizable customer base, amid the intensely competitive subscription-streaming landscape on the one hand and the massive amount of free video in apps like Snapchat, TikTok, Instagram and YouTube on the other.
Quibi stuck to Katzenberg’s belief in a mobile-first service even after it was clear, especially during coronavirus quarantines, that viewers wanted to watch the content on their big-screen TVs. The company finally launched native apps for Apple TV, Amazon’s Fire TV and Android TV only two days before Quibi announced that it will close its doors.
“Quibi was founded to create the next generation of storytelling,” Katzenberg said in a prepared statement. “We have assembled a world-class creative and engineering team that has created an original platform fueled by groundbreaking technology and IP, enabling consumers to view premium content in a whole new way. The world has changed dramatically since Quibi launched and our standalone business model is no longer viable. I am deeply grateful to our employees, investors, talent, studio partners and advertisers for their partnership in bringing Quibi to millions of mobile devices.”
Katzenberg, in saying “the world has changed dramatically since Quibi launched,” is still laying the blame for the startup’s flameout at the feet of COVID — even though in an open letter, he and Whitman acknowledged that “other businesses have faced these unprecedented challenges and have found their way through it.”
It’s a black eye for Katzenberg, who previously had a long and successful career in the movie biz, most recently as CEO of DreamWorks Animation (which was acquired by Comcast in 2016).
Katzenberg and Whitman posted an open letter on Medium to “the employees, investors, and partners who believed in Quibi and made this business possible.”
“Our failure was not for lack of trying; we’ve considered and exhausted every option available to us,” the two execs wrote.
They also apologized: “All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down. We cannot thank you enough for being there with us, and for us, every step of the way.”
Katzenberg and Whitman attributed Quibi’s failure to gain traction to one of two reasons (or, they said, both): “because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing.” The execs added, “The circumstances of launching during a pandemic is something we could have never imagined but other businesses have faced these unprecedented challenges and have found their way through it. We were not able to do so.”
Quibi said it will begin winding down its operations and plans to work with its legal and financial advisers over the coming months to dissolve the company and identify “a suitable buyer or buyers for its assets.” It isn’t clear who would buy Quibi’s assets, except perhaps at a steep discount, as the company’s pitch to sell itself and/or its programming rights to companies including NBCUniversal, Apple, Facebook and WarnerMedia reportedly came to naught.
“While we have enough capital to continue operating for a significant period of time, we made the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our talented colleagues with grace,” said Whitman, who before joining Quibi in 2018 was CEO of Hewlett Packard Enterprise and eBay. “We continue to believe that there is an attractive market for premium, short-form content. Over the coming months we will be working hard to find buyers for these valuable assets who can leverage them to their full potential.”
According to the company, Quibi subscribers will receive separate notifications regarding the final date of their access to the platform. The service had cost $4.99 per month with ads and $7.99 per month without ads.
Katzenberg had boasted of paying top-dollar for original projects — upwards of $6 million per hour of programming — from Hollywood A-listers including Steven Spielberg, Guillermo del Toro, Jennifer Lopez, Sam Raimi, Chrissy Teigen, Reese Witherspoon, Antoine Fuqua, Lena Waithe, Anna Kendrick, Rachel Brosnahan, Issa Rae, Kevin Hart and Steven Soderbergh. Quibi also was paying for content from partners including NBC News, BBC News, ESPN, Blumhouse, the Weather Channel and CBS (which produced “60 in 6 by CBS News”).
After all its big-ticket spending, Quibi nabbed 10 nominations in this year’s Emmy Awards short-form categories, which historically have been populated by TV shows’ digital sidecar projects. Quibi’s drama “#FreeRayshawn,” from executive producer Antoine Fuqua, won two Emmys, for actors Laurence Fishburne and Jasmine Cephas Jones. The series, produced by Fuqua Films and Sony Pictures Television, had a $15 million budget; that worked out to $1 million per episode, which averaged around 10 minutes each.
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