Executive Summary:
Quibi TV was an on-demand streaming application that focused on short-form video content. Episodes were around 10 minutes in length.
Quibi, despite raising billions, had to shut down within six months of launching. Its content library was eventually sold to Roku for around $100 million.
Quibi failed because it burned through too much cash, due to poor content, high prices, missing features, personal issues between the founders, as well as legal troubles.
What Is Quibi TV?
Quibi TV was an on-demand streaming application that focused on short-form content. Many episodes on Quibi were only around 10 minutes long.
The content was designed to be consumed on mobile devices. Hence, Quibi TV was solely available on Android and iOS mobile devices.
Even the movies that the company developed were split and published in various 10-minute chapters.
Programming was divided into three distinct categories, namely scripted entertainment (what it called ‘lighthouse’ shows), unscripted content (e.g., documentaries and reality shows), and daily productions such as news or lifestyle content.
Quibi operated on a subscription model. For $4.99 per month, users could gain access to ad-supported content. For $3 more ($7.99 per month), all ads would be removed.
Ads were shown from an exclusive list of 10 partners such as Google, Taco Bell, Pepsi, T-Mobile, Procter & Gamble, Walmart, among others.
The platform worked together with some of the biggest names in entertainment, including Kevin Hart, Idris Elba, Zac Efron, Anna Kendrick, Jennifer Lopez, or Steven Spielberg.
Despite tons of hype and billions in funding, Quibi was ultimately shut down six months after launching.
How it became to be, who was behind it, and why it ultimately failed will be addressed in the next few sections.
What Happened to Quibi?
Quibi, previously headquartered in Los Angeles, California, was founded in 2018 by Jeffrey Katzenberg and Meg Whitman.
Both Katzenberg and Whitman are considered some of the most accomplished executives the media and tech industry has ever seen.
Whitman, after graduating from Princeton and Harvard Business School, began her career at Procter & Gamble in 1979.
She then moved on to work as a consultant at Bain where she rose to become a senior vice president. In 1989, she accepted a job at The Walt Disney Company to serve as the firm’s vice president of strategic planning.
In 1995, she held her first CEO role at Florists’ Transworld Delivery where she lasted two years. Afterward, she went on to join Hasbro as its Playskool Division General Manager, where she oversaw the launch of Teletubbies in the United States, among many other initiatives.
Her big career breakthrough came a few months later when she joined a three-year-old startup called eBay as its newest CEO. At the time, eBay had around 30 employees and was generating annual revenues of about $4 million.
Under her leadership, eBay grew to become one of the largest online marketplaces the world had ever seen. Her tenure included an IPO in 1998 as well as the acquisition of companies like PayPal or Skype.
Ten years after joining the company, in November 2007, Whitman resigned from her role as CEO. What followed next was probably the most unsuccessful episode of her professional life (well, at least until Quibi).
On February 10, 2009, Whitman announced that she would run for governor of California. Despite spending $144 million of her own money, she ended up losing to Jerry Brown. Unfortunately for her, this wasn’t the end of the story.
Subsequent reporting revealed that Whitman, despite running for governor, actually hadn’t voted for the past 28 years. Next, Nicky Diaz Santillan, her housekeeper from 2000 to 2009, revealed that she worked for the Whitman’s despite her status as an illegal worker.
Additionally, her son at the time faced serious allegations of rape, adding further fuel to the already burning fire.
Lastly, Whitman had some questionable ties to investment bank Goldman Sachs, which (in 2001) put her on its corporate board while paying her $475,000 for a few hours of service. The investment bank, furthermore, granted her preferential access to hot tech IPOs, which she resold within a matter of hours.
After her political fiasco, Whitman decided to get back to what she’s best at: leading tech companies. In September 2011, she was named the CEO of Hewlett-Packard (HP), a role she held until July 2017.
Hours after announcing her departure, she received a phone call from none other than Jeffrey Katzenberg. Katzenberg, just like Whitman, can look back on decades of success in the media industry.
At age 14, he volunteered for the former New York City mayor John Lindsay who heavily influenced his view on work and life as a whole. After enrolling at NYU in 1970, Katzenberg only lasted one semester and went back to working for the mayor.
In 1975, after five years as a public servant, Katzenberg finally made the move to Hollywood. He started working for Paramount Pictures in the firm’s mailroom where eventually rose to become Barry Diller’s (former Paramount CEO) personal assistant and mentee.
Katzenberg’s big breakthrough came when he contributed to reviving the Star Trek franchise with the launch of Star Trek: The Motion Picture, earning him a promotion to vice president of production – at age 29.
Over the years, Katzenberg was responsible for many more hits, which drastically increased his stock among the media ranks. In 1984, he made the move to Disney where he served as chairman of film production.
Back then, Disney was struggling due to releasing a series of flops, resulting in dwindling earnings. Katzenberg quickly turned the ship around as he became involved in some absolute smash hits, including The Lion King, Aladdin, and The Little Mermaid.
Unfortunately, the 1990s were a little less kind to him. In 1994, he was ousted from Disney after allegedly being passed over for a promised promotion to executive president, which resulted in a nasty public fight. He even sued Disney for breach of contract, stating that he was owed 2 percent of the film studio’s profits. The two parties eventually settled in 1999, which reportedly netted Katzenberg $100 million.
In the meantime, he used his Hollywood contacts to start DreamWorks together with director Steven Spielberg and billionaire David Geffen. In the first ten years, DreamWorks released award-winning titles such as American Beauty, Gladiator, A Beautiful Mind, and Shrek.
Katzenberg was much more focused on the animation side of the business. It, therefore, came as no surprise when the animation division, in 2004, was spun off into a publicly-traded company called DreamWorks Animation. Subsequent titles of the Animation business included Madagascar, Shark Tale, or Kung Fu Panda.
Katzenberg, who led DreamWorks Animation as CEO, remained in his role until 2016. In April of the same year, NBC announced that it would acquire DreamWorks Animation for $3.8 billion – with Katzenberg stepping down from his chief executive role.
In January 2017, he announced the launch of WindrCo, a $600 million venture fund with the purpose of investing in media and technology startups. The move was inspired by his mentor Barry Diller, who had made billions with his investment company IAC.
Katzenberg and Whitman met various times after their initial call to discuss their views on the tech and media world as well as ideas for a potential partnership. In August 2018, they finally let the cat out of the bag.
Led by CEO Whitman, the pair announced the eventual launch of a revolutionary mobile-first viewing experience called NewTV. To add even more to the hype, NewTV would be built with $1 billion in seed funding.
Participating investors represented the who’s who of the media world and included Hollywood studios 21st Century Fox, Disney, Lionsgate, Metro Goldwyn Mayer, NBCUniversal, Sony Pictures Entertainment, Viacom, and Warner Media. Even Chinese e-commerce giant Alibaba participated in the round.
Two months later, at Vanity Fair’s New Establishment Summit in Los Angeles, the duo finally revealed the name of their venture. Quibi, short for ‘quick bites’, would bring “captivating entertainment, created for mobile by the best talent, designed to fit perfectly into any moment of your day.”
And hiring the best talent they did. The newly found venture was able to snatch away executives from some of the world’s biggest media and tech companies, including Instagram, CBS, Snapchat, Hulu, or Netflix.
Employees weren’t the only ones that got themselves a sweet deal. Content producers would be able to license out their intellectual property to other platforms after two years and would own all the rights to the content after seven.
Quibi itself was heavily influenced by Dan Brown’s ‘Da Vinci Code’. The 500-page-book was split up into over 100 chapters, allowing readers to consume a limited amount of content in between.
Furthermore, by giving creators ownership over their IP, the founding team assumed that they would be able to attract the best and brightest talent, which in turn would lead to better content.
By mid-2019, Quibi fully pivoted into a mobile-first experience. While early pitch decks still included the ability to stream via TV, the latter announcement emphasized that its content was produced and to be consumed via mobile phones and tablets only.
The executives were strategically building up hype over time by announcing that dozens of A-list celebrities had committed to create content for Quibi. In the first year, Quibi signed deals with the likes of Anna Kendrick, Laurence Fishburne, Justin Timberlake, and many other superstars.
The addition of A-listers helped the newly established venture to attract world-class advertisers as well. In June 2019, during the Cannes Lions International Festival of Creativity, Katzenberg and Whitman announced that companies like Google, P&G, and Walmart had committed to spending $100 million on advertising on the platform for the first year (Quibi eventually sold out all the $150 million in advertising space it had offered).
In October of the same year, Quibi also announced a partnership with T-Mobile. The deal would allow the mobile carrier’s more than 83 million U.S.-based customers to access Quibi’s content free of charge.
Quibi’s executive team teased a few more features and screenshots prior to the launch. For instance, at the Consumer Electronics Show (CES) in Las Vegas in January 2020, the two executives revealed Quibi’s signature and patented Turnstyle technology, which allowed users to seamlessly switch between horizontal and vertical angles.
First cracks began to emerge that very same month. The Information reported that CEO Whitman compared journalists, who began questioning the purpose of launching yet another streaming platform, to pedophiles during a company-wide meeting.
Unfortunately, the worst was yet to come. Three months later, in March 2020, the world had to shut down and quarantine as a result of the coronavirus pandemic. Quibi, which branded itself as the platform that people would use in their in-between moments (e.g., during train rides or while eating out) suddenly lost its niche use case.
On top of that, the firm was sued by Eko, an interactive video company, which alleged that Quibi had infringed on a patent that Eko had previously developed. The patent in question was strikingly similar to the Turnstyle technology that Quibi had touted a few months prior at CES.
To combat this sudden negative development, the company first raised an additional round of funding, netting them another $750 million in cash. Then, it announced that whoever preordered the service would receive a 90-day free trial.
Despite major headwinds and deliberations of postponing the launch, Quibi stuck to its release plans. On April 6th, 2020, it finally launched to the public. In the beginning, an array of 50 shows was available to be streamed. New episodes and shows would then be added daily to keep engagement high.
Quibi, according to CEO Whitman, was downloaded 1.7 million times during its first week of operation. By mid-May, that figure had risen to around 3.5 million.
Yet, reports soon emerged, stating that many of its advertising partners grew dissatisfied with the lackluster adoption and usage of the service. As a result, Quibi beefed up the number of ads it began to show to users.
The team had to correct a few mistakes it made with regards to the product as well. Users were simply not digging the mobile-first viewing experience, which resulted in Quibi adding AirPlay and Chromecast as an additional viewing option.
Unfortunately, the negative momentum simply continued. In June 2020, Quibi’s execs allegedly took a 10 percent pay cut while also contemplating a staff reduction of similar proportions. A month later, in July, most of its users were gone.
Data from SensorTower revealed that of the 910,000 users that signed up via the free trial, only 8 percent (equal to 72,000) remained committed to the platform. Despite adding more features (such as the ability to screenshot) as well as a completely free tier for Australians and New Zealanders, its demise became only a matter of time.
Finally, on October 21st, 2020, Quibi announced that it intended “to wind down its business operations and initiate a process to sell its assets.” The platform was ultimately shut down on December 1st, 2020.
In the coming weeks and months, Quibi’s founding team tried their best to return as much of the initial investment as possible. Despite Eko demanding a freeze of all of Quibi’s assets, the team was eventually able to find a buyer.
In January 2021, streaming device manufacturer Roku announced that it would acquire the right to 75-plus Quibi shows for about $100 million. The content would be rebranded to Roku Originals and be available on The Roku Channel. Those shows would ultimately release in August.
A month later, Quibi also managed to settle its longstanding lawsuit with Eko. Quibi agreed to transfer the Turnstyle tech and intellectual property to Eko. However, financial terms of the settlement weren’t disclosed.
Luckily, most of the firm’s former employees, which were lured in by the prospects of stock options, also found roles at companies such as Freeform, CBS News, and Universal.
As far as Katzenberg and Whitman are concerned: both founders have stayed away from the public eye after the platform was shut down. It remains to be seen what their next move will be.
Why Did Quibi Fail?
Quibi failed because of poor content, comparatively high pricing, a lack of features (such as screenshots), extensive spending, legal troubles, as well as interpersonal issues within its leadership.
Let’s take a closer look at each of those reasons in the section below.
Content Quality
The main reason for Quibi’s rapid demise became the lackluster content that was served on its platform.
While its shows did score 10 Emmy nominations in the Short Form category (where they mostly competed against YouTube content) and even won a few, critics often emphasized that none of Quibi’s shows were truly binge-worthy.
Content quality, after all, is the main determinant for why somebody signs up and stays subscribed to a streaming service.
Netflix took off when it figured out original content with the launch of House of Cards. Disney+ was able to attract millions of users within days due to its extensive and high-quality content library, which entails franchises like Marvel and Star Wars.
Whether it was truly original content or the revamp of shows like Punk’d (hosted by Chance The Rapper), none of its shows were able to keep users engaged.
Pricing
The quality and originality of one’s content often directly correlates with the amount of money a platform can demand.
Quibi was charging users $4.99 per month for an ad-supported version and $7.99 if users preferred no ads.
In the end, both the lower as well as higher-tier were simply not competitive. On the lower end, Quibi was competing with the likes of Pluto TV and Tubi TV, two ad-supported streaming platforms that do not charge anything. On top of that, TikTok and YouTube could be considered competition as well.
With regards to the premium tier, Quibi was only slightly cheaper than Amazon Prime Video and Netflix ($8.99 for the basic plan) or even just as expensive as Disney+. Services like Hulu or Apple TV+ are even cheaper.
Additionally, many customers these days suffer from what experts refer to as ‘subscription fatigue’. The video on demand (VOD) industry has grown to dozens of players competing for eyeballs and customer pockets.
Many people are simply not willing to pay for every new service that comes along. At some point, they normally make the decision of limiting their spending to a few selected platforms.
If your price is not competitive, customers simply won’t bother to subscribe due to the abundance of alternate offerings.
Features
The founding team’s thesis was to develop content that customers could consume in their in-between moments, whether riding on the bus or while having a café. Then Covid happened.
The product was developed to be solely consumed on mobile devices. Once the pandemic broke out, users who owned a TV or laptop did not have a reason to consume the shows on their phones. Quibi only added AirPlay and Chromecast support two months after launching.
Another feature that was missing was the ability to take screenshots. Whenever users tried to take one, they would simply get a blacked-out image.
In the age of social media, this became a major mistake. For instance, when Disney+ launched its streaming platform alongside The Mandalorian, Baby Yoda was taking the world by storm.
Fans were creating thousands of memes and sharing them across all of their social profiles. This, in turn, attracted others to check out the show and sign up for the service. Again, Quibi only added a screenshot feature three months after launching.
The lack of sharing was especially detrimental because Quibi was a newly established service, which customers did not know about.
Target Audience
Another misstep of Quibi was the lack of understanding of its target audience. According to its executives, Quibi was aimed at Gen Z and millennial viewers.
Despite targeting a younger generation, most of its actors would probably be raising the eyebrows of an older generation.
As such, the platform lacked personnel that would make its users tune in and be willing to pay a monthly fee.
Quibi, furthermore, dabbled in creating influencer-based shows that would feature Instagram, TikTok, or YouTube stars. Unfortunately, none of these came to fruition.
Its undeniable that there’s money to be made with influencer-led content. For example, the Zeus Network, which is partially owned by influencers, has carved out a niche for itself without raising billions in funding or relying on expensive production.
Spending
According to Katzenberg, Quibi spent upwards of $100,000 per minute of content – despite the fact that it did not even own the IP.
Furthermore, based on calculations from research firm Apptopia, it invested more than $400 million in marketing-related efforts.
Lastly, the company also spent tons of cash on personnel. Quibi was able to recruit employees from the likes of Netflix, Instagram, or Snapchat, which likely came at a substantial price tag.
By spending heavily on various fronts, Quibi severely limited its runway. The only remaining option would have been to raise more capital, which became increasingly harder with the mounting problems surrounding the firm.
More than a decade ago, Eric Ries popularized the lean startup method, which urges founders to develop without investing too many resources while testing and iterating quickly.
One of the reasons for Netflix’s success was its reliance on local talent and thus cheaply produced content. For example, Netflix reportedly spent $21 million to develop Squid Game, which amassed 1.65 billion hours of viewing within 28 days of its release.
In Quibi’s case, the founding team’s vast experience and previous successes were working against them. Their convictions were so strong that they simply did not accept being wrong, despite industry experts doubting them even prior to the launch.
Legal Troubles
As previously stated, Quibi was sued by Eko, which claimed that the streaming platform had stolen its patented technology and used it for its Turnstyle feature.
To make matters worse, the lawsuit was funded by activist hedge fund Elliott Management, which held a minority stake in Eko at the time.
While the lawsuit is certainly not the main contributor as to why Quibi folded, it nonetheless became a serious distraction and headache for some of its executives.
How much it affected their ability to execute is certainly up for debate, yet it cannot be denied that it had at least some adverse impact on the founders’ ability to focus.
It also would have negatively influenced their chances to raise additional funding since Eko could have commanded a bigger settlement with more cash on Quibi’s balance sheet.
Founder Issues
Talking about personal issues: various reports suggested that Katzenberg and Whitman had some interpersonal issues when they first began working with each other.
CEO Whitman even threatened to leave the company back in 2018 because she felt that her relationship with Katzenberg would negatively affect the firm’s performance.
Supposedly, her biggest issue was the fact that Katzenberg was micro-managing her to the teeth, leaving her with no freedom whatsoever. The pair allegedly fixed those issues but doubts remained nonetheless.
Additionally, both Katzenberg and Whitman were already up there in age when they launched the business.
The key to entrepreneurship is to double down on your winners but abandon ship when there’s no hope in sight.
Both founders likely did not want to waste their late 60’s and early 70’s trying to salvage a business that, in all likeliness, was destined to fail.
