Quibi, the beleaguered short-form content company started by Jeffrey Katzenberg and Meg Whitman, announced on Wednesday that it was shutting down just six months after the app became available. The mobile streaming service offered entertainment and news programs in five- to 10-minute chunks intended to be watched on phones by people on the go, but it struggled to find an audience with everyone stuck inside their homes during the pandemic.
Despite raising a combined $1.75 billion in cash from each of the Hollywood studios, the Chinese e-commerce giant Alibaba and other investors, Quibi will wind down its operations and begin selling off its assets. It had searched for a buyer for the company but found no takers.
“Quibi is going to go down as a case study at Harvard Business School on what not to do when launching a streaming service,” Stephen Beck, the founder and managing partner of the management consultancy cg42, said in an interview.
The news of Quibi’s shutdown was first reported by The Wall Street Journal. Mr. Katzenberg announced the news to his 200-person staff on Wednesday afternoon. Quibi did not give an exact date for when the app would no longer be available.
“The world has changed dramatically since Quibi launched and our stand-alone business model is no longer viable,” Mr. Katzenberg said in a statement.
Ms. Whitman added that while the company had “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.”
Quibi produced more than 100 original series, along with offerings like news from NBC and CBS, and sports programming from ESPN. Marquee names like Steven Spielberg, Sam Raimi, Antoine Fuqua, Jennifer Lopez and Chrissy Teigen were involved. But it struggled to attract subscribers from the start and those who did tune in groused that Quibi wasn’t giving them what they wanted. Consumers complained that the programming couldn’t be watched on television sets (something that became more important with people stuck at home) and they criticized the app’s inability to allow them to share content on social media, a feature that could have helped generate word-of-mouth excitement.
Quibi is also embroiled in a lawsuit with Eko, a tech company that accused Quibi of misappropriating trade secrets and infringing on a patent for the technology that allows viewers to shift seamlessly between horizontal and vertical viewing on a phone. The activist hedge fund Elliott Management has committed to funding the lawsuit.
And as the pandemic continued for months, the company’s backers began looking for a return on their investment.
One major challenge in trying to orchestrate a sale was the fact that Quibi doesn’t own any of its content. In an attempt to lure the brightest lights in Hollywood, Quibi offered each of its partners sweetheart deals where Quibi would pay both to produce the content and then to license the programming for an exclusive two-year period. After that two-year term ended, Quibi would still be able to show the programming on its app, but the content creator would be allowed to stitch together the short episodes into a television show or a film and resell it to another buyer.
“Katzenberg created something that was beneficial to content creators,” said Michael Goodman, an analyst with Strategy Analytics. “But when push came to shove, the market spoke that chunking up premium content is not what consumers want. They like short-form video: news clips, sports clips, beauty. There is a market for that. It’s just not a premium market. It’s not a new lesson but a lesson that has to be continually taught over and over again.”
Despite its shortcomings, Quibi did win two Emmy Awards last month, for the actors Laurence Fishburne and Jasmine Cephas Jones in the series “#FreeRayshawn” from Mr. Fuqua. Two of the company’s other shows also scored nominations: “Most Dangerous Game” starring Christoph Waltz and Liam Hemsworth, and a reboot of the comedy “Reno 911!”
“We continue to believe that there is an attractive market for premium, short-form content,” Ms. Whitman said in the statement. “Over the coming months we will be working hard to find buyers for these valuable assets who can leverage them to their full potential.”
Hollywood is marveling at the pace of Quibi’s demise. The company’s advertising campaign for its April introduction included a series of commercials featuring characters facing imminent death, whether by quicksand or from a zombie bite. They all had about “a Quibi” before disaster struck. In the end, the company’s life cycle didn’t last much longer.
Source: Read Full Article