Quibi, Jeffrey Katzenberg’s bid to get in on the live streaming market, has failed. It sputtered after a little more than six months squandering an estimated $2 billion in investments.
According to Variety Quibi’s investors included Disney, NBCUniversal, Viacom, Sony Pictures Entertainment, WarnerMedia, Lionsgate, MGM, ITV and Entertainment One.” And Forbes reports that $63 Million of the $1.75 billion raised by the company was wasted on a failed advertising campaign.
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Quibi had about 200 employees who will now need to search for work in the midst of the Covid-19 recession. The service reportedly had 710,000 subscribers, down from a high of more than one million.
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Sink your teeth into this. New #FrightBites drop every. Single. Day. Only on Quibi: https://t.co/GMVRTNGb0W pic.twitter.com/7bpWPEa1DO
— Quibi (@Quibi) September 28, 2020
So what happened?
Well for starters the live streaming market simply has too many options with all of the different providers. After Netflix, Hulu and Amazon, all of which were first to the market, HBO, Warner Bros, Apple, Disney, NBCUniversal and more have all gotten into the game.
Unlike Quibi, the movie studios have a wealth of movie and television shows to offer subscribers on their platforms.
So to find a niche in this market Quibi offered “short form” programming. What does that mean? Well a television show on Quibi had 10 minute episodes in 10 or so installments.
But this was nothing more than a gimmick. One such show was really just 4 half hour episodes with each one split into three parts. Its dramas seemed to be nothing more than TV movie split up into 10 to 12 10 minute segments.
It is not clear who exactly was supposed to be interested in this for pay. People were expected to upgrade after using up the free part of the service.
Variety reported in July that only 8% of the people who took advantage the free trial converted to paying subscribers.
Stephen Beck, the founder and managing partner of the management consultancy cg42 told the New York Times, “Quibi is going to go down as a case study at Harvard Business School on what not to do when launching a streaming service.”
Another problem that the live streaming service had was that it only bought seven-year licenses on its content. This means that it did not own the rights permanently and so could not build up its own library of content.
Jeffrey Katzenberg issued a statement saying, “Quibi was founded to create the next generation of storytelling. 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.”
Quibi CEO Meg Whitman said “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.”
“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.”
While this may constitute an embarrassing failure for Jeffrey Katzenberg, but it should not be taken as a warning for other live streaming services. As explained, it was the bizarre business model of Quibi which bought it down.
