Photo by Fran Jacquier on Unsplash
Unless you have been living under a rock for the past few days or just out of the loop; Quibi has recently announced that it is shutting down after only six months after it launched. Now the big question on everyone's mind is HOW?. How does a business that raised over $1 billion in funding from all the major studios in Hollywood fail in less than a year? Was it the Covid-19 pandemic? Was it just a bad idea or was it just timing? Let's deep dive into this and figure out what happened.
What is Quibi?
Quibi is an American short-form streaming platform that generated content for mobile devices. It focused primarily on creating episodes that were only 10 minutes or less. Even its name is a spin of the phrase "Quick Bites." Quibi was founded by Jeffrey Katzenberg in August 2018. He initially envisioned it as a news platform and the original name was NewsTV. When it comes to television, Katzenberg is no stranger. He co-founded Dreamworks and was the chairman of Walt Disney Studios from 1984-1994. It was during his tenure at Disney that the company made some of its greatest hits like The Lion King, The Little Mermaid, and Beauty and the Beast.
Katzenberg brought in Meg Whitman to become CEO and help Quibi break into the streaming market. From the outside looking in, Whitman looked like the perfect choice to be CEO. She was a former Disney executive and the former CEO of two different tech companies (eBay and HP). Very few people in the world would argue that the team of Katzenberg and Whitman couldn't disrupt the way we watch TV.
State of the streaming market
When Quibi launched on April 6, 2020; it was entering a highly competitive market. By this time, Disney, Netflix, Apple, Google, HBO, and Amazon were all fighting for control of the subscription-based market. Additionally, Quibi had to also fight for attention with all the freemium services like Tubi and Crackle. Quibi hedged all their bets on creating great content and short-form episodes that were 10 minutes or less.
Using the billion dollars it raised during its fundraising, Quibi was able to get some of Hollywood's top talent. Steven Spielberg, Jennifer Lopez, Idris Elba, Kevin Hart, and Ridley Scott are only a few examples of who Quibi tapped to make them content.
What went wrong
When Katzenberg and Whitman announced the shutdown, they gave only a few tidbits on why they were closing up shop. The Duo sited issues such as dealing with the pandemic, failing to meet the target for subscribers, and timing. The reasoning they gave is understandable, but I don't completely buy it. Their strategy is ultimately what led to their downfall. Now let's look at some of the factors they described along with some of my own.
Timing
Is the world not ready for short-form content? No, it's ready and it has been eating it up left and right. The best example of this is YouTube. YouTube is the king of short-form and their 2 billion monthly views keep them firmly seated on their throne.
The Pandemic
According to Second Measure, streaming services have seen a 50% spike in sales since the pandemic started. Having people stuck at home seemed like a great win for streaming companies. However, since Quibi was so young as a company, it probably didn't have the right internal infrastructure to facilitate a massive remote operation.
Not enough subscribers
For $5.99 a month, Quibi was only able to lock down 500,000 subscribers. It just wasn't enough to help generate any real profit after they spent a ton of money on talent and content. It turned out that people did not want to pay 6 bucks a month to binge 10-minute episodes.
The Strategy
Focusing primarily on mobile devices feels like they shot themselves in the foot. Even though they eventually pivoted to include streaming devices like amazon fire stick; the damage was done. The lack of a real free option hurt them in attracting more people to the platform. It just seems like a missed opportunity. The short-form content could have been free with ads and then users could pay for consolidated long-form content with or without ads. Lastly, they overpaid for Hollywood content instead of focusing on enough Youtube content creators and empowering those creators to create for Quibi. These creators have massive follower bases that would have easily transitioned to Quibi.
I still think Quibi was a good idea, but it just failed to execute the way it needed to. Who knows, maybe in the future, someone will come in with the right formula to make Quibi v2.0 work.
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