The short form mobile app raised $1.75 billion in venture funding before its launch in April of this year. Just over six months later, it’s shutting down.
In an open letter to employees and investors posted to Medium on Wednesday evening, cofounders Jeffrey Katzenberg (former DreamWorks Animation CEO) and Meg Whitman (former HP CEO) wrote, “It is with an incredibly heavy heart that today we are announcing that we are winding down the business and looking to sell its content and technology assets. Quibi was a big idea and there was no one who wanted to make a success of it more than we did. Our failure was not for lack of trying; we’ve considered and exhausted every option available to us.”
Quibi had investments from Alibaba, AT&T’s WarnerMedia, Comcast’s NBCUniversal, Disney, ViacomCBS, MGM, and Sony. It had a glitzy distribution partnership with T-Mobile. The mobile app produced shows starring big-name talent like Reese Witherspoon, Liam Hemsworth, JLO, Tyra Banks, Chance the Rapper, Demi Lovato, and more.
Quibi had $1.75 billion in funding to blow on content and marketing, but still may have overspent on individual projects or talent. In February, Quibi shelled out $5.6 million to run a 30-second Super Bowl ad; the ad ended up among the worst-rated with viewers.
Then the app faced backlash almost immediately after launch for the hefty sums it paid some stars, including $6 million to Reese Witherspoon to narrate a nature program; Witherspoon’s husband, former CAA agent Jim Toth, was Quibi’s head of content acquisitions and talent. By June, just two months after launch, Quibi was asking its top executives to take 10% pay cuts amid the pandemic.
Whitman and Katzenberg were already running into problems with each other. Whitman threatened to quit as the company’s CEO, stating Katzenberg undermined her authority, and belittled her, according to The Wall Street Journal. It’s hard to get a company off the ground in an increasingly competitive market, but it’s near impossible if the two heads of that company can barely work together.
The premise of Quibi was based around original content, with episodes shorter than 10 minutes. It was built for people to watch content on the go, using their phones wherever they go. But the app launched on April 6, at the height of nationwide lockdown during the COVID-19 pandemic. During lockdown, people were not on the go, riding public transit, or waiting around at their local gyms. The scenarios Quibi marketed too, prior to the pandemic, were common.
Many argue if the shutdown didn't happen, people might have watched more of Quibi's content regularly. Even though there were major headlines in press claiming the exact opposite.
Instead, people were at home, watching shows on fullscreen televisions. They were watching full length shows and searching for longer content to pass the time. Quibi did not launch with an option to watch on your television. It was totally mobile, eliminating an entire medium for them to use.
The app saw 1.7 million (free) downloads in its first week, but then downloads dropped dramatically. After just 10 days, the app had fallen out of the top 70 free apps in the iOS App Store. In an interview with the New York Times in May, Katzenberg blamed Quibi’s lackluster launch on the pandemic, “I attribute everything that has gone wrong to coronavirus. Everything.”
If all of its stumbles weren’t damaging enough, Quibi also got hit with a patent lawsuit from video startup Eko, bankrolled by hedge fund Elliott Management, over one of Quibi’s most praised features. The feature was automatic re-formatting of video depending on the orientation of the viewer’s phone.
Eko said that Quibi stole the tech. In July, a U.S. District Judge dismissed three of Eko’s nine claims against Quibi, including one that claims Katzenberg entered into an “implied contract” with Eko, but allowed the patent infringement suit to move forward.
Quibi has $350 million left to return to shareholders. That means it blew through $1.4 billion in six months. Katzenberg reportedly shopped a Quibi acquisition to NBCUniversal and Facebook, but both passed.
Many know the power of memes within the new era of entertainment. Did you know the only viral Quibi clip was recorded from another phone? Quibi didn’t launch with the ability to take screenshots or share clips from its shows and films, and without those sharing features, there was no way for people to easily discover and engage with Quibi’s series. Streaming services and social media apps aren’t just vying for your credit card, they also want your attention. If people are spending their days watching Netflix, playing Fortnite, scrolling through TikTok, or posting on Instagram, it’s going to require something exceptional to take their attention away.
Critics claim Quibi was full of spaghetti content, throwing new content at the wall to see what sticks. While Quibi tried to get people’s attention, time spent on the apps like Twitch and YouTube grew rapidly. It wasn’t that people didn’t have more time at home to watch things, they just were not tuning into Quibi.
Unlike Quibi, short-form content is not at the end of its rope. Katzenberg may have fundamentally misread how the demographic under 35 think of programming these days. The idea that name talent, either in front of or behind the camera, matters anywhere near as much today as it did even ten years ago is wrong.
The idea behind the service of premium short-form content is inevitable, even if Quibi didn’t get it right. There is an audience for 'bite size' entertainment with production values closer to Netflix, but timing is everything.
Courtesy of New York Times, Variety, Page Six, The Information, The Wall Street Journal and Teller Report