With $1.8B In Investment, Video-Streaming Platform Quibi Founder Jeffrey Katzenberg Blames Flop Launch On Covid-19
Things did not start well for Quibi.
The streaming app was launched to provide five-to-10-minute chunks of video entertainment and news for people on the go at a time when most are homebound by covid-19.
Offered with a free 90-day trial, the short-form mobile video platform has been installed on iPhone by 2.9 million customers, according to Sensor Tower. Quibi says the number is closer to 3.5 million, of which 1.3 million are active users, New York Times reported.
That sounds like a lot, but it’s not enough for Jeffrey Katzenberg, former head of Walt Disney Studios and a founder of DreamWorks Pictures.
Katzenberg, 69, started Quibi with Meg Whitman, 63. Quibi’s CEO, Whitman is the former head of Hewlett-Packard, former CEO of eBay and was a California gubernatorial candidate in 2010. Whitman oversaw eBay’s expansion from 30 employees and $4 million in annual revenue to 15,000 employees and $8 billion in annual revenue.
They’ve raised close to $1.8 billion for Quibi from Chinese e-commerce giant Alibaba and Hollywood studios, pitching it as an app designed for how people consume media now — “on their phones during slow moments,” while they wait in line or commute.
Conditions couldn’t have been more different on the day Quibi came out less than six weeks ago. Under lockdown orders, most people headed home to work and set up makeshift schools for their children, also grounded due to social distancing.
“I attribute everything that has gone wrong to coronavirus,” Katzenberg said in a video interview with the New York Times. “Everything. But we own it.”
It’s regrettable that Quibi launched when it did, he said.
“If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” he said. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.”
Quibi fell off the list of the 50 most downloaded free iPhone apps in the U.S. a week after it went live on April 6. Now it ranks No. 143 as of this writing among new original shows for all categories, and No. 12 among new original entertainment shows, according to Sensor Tower.
Downloads have been slow despite Quibi’s impressive lineup of stars and producers.
Hip-hop artist and Hollywood entrepreneur 50 Cent branched into animation to produce “Trill League” for Quibi — a Black superhero series based on Anthony Piper’s graphic novel.
LeBron James, Jennifer Lopez, Idris Elba, Chrissy Teigen and Steven Spielberg are some of the other stars and producers creating content for Quibi.
Quibi’s 3.5 million downloads in its first month are being compared unfavorably with streaming giants such as Disney+, which got 10 million downloads in its first 24 hours.
“The streaming industry is one of the biggest beneficiaries of the Covid-19 lockdown,” said Danyaal Rashid, a thematic analyst at data and analytics company GlobalData, in an interview with Advanced Television. “Netflix doubled its new subscribers in Q1 2020 to 15.8 million, almost entirely due to bored people stuck at home. Some would argue that this is the perfect time to release a new streaming platform, and I’d be inclined to agree.”
Katzenberg said he’s not happy with the early numbers. He had projected 7 million users and $250 million in subscriber revenue in Quibi’s first year. “Is it the avalanche of people that we wanted and were going for out of launch?” he said. “The answer is no. It’s not up to what we wanted. It’s not close to what we wanted.”
TV and film production has shut down everywhere, and Quibi has decided to slow the pace of its new releases until 2021 so it can offer fresh content, NYT reported.
Not everyone agrees that covid-19 is solely responsible for Quibi’s lackluster launch. Other factors are at play including Quibi’s restrictive nature, according to analyst Rashid.
“The platform only supports mobile viewing and short-form video,” Rashid said. “The content library is weak compared to larger streamers; and at $7.99 a month, it is expensive. Disney+ is just $6.99 a month. Quibi lacked the dynamism to adapt to Covid-19. Users want to binge their favorite shows on the big screen – a problem Quibi faced even without the perils of Covid-19.”
Quibi is learning as it goes.
Although the original commitment was to be a smartphone-only app, this week Quibi subscribers with iPhones will be able to watch shows and movies in chapters such as “Chrissy’s Court” and “Most Dangerous Game” on TV screens — something subscribers asked for.
Users will be also be able to share Quibi content on social media platforms in the future.
Interest has been minimal in segments Quibi bet on — news programming for shows from NBC, BBC, Telemundo and ESPN that are found under the Quibi’s “Daily Essentials”. They proved no-so-essential, Katzenberg said.
“There are a whole bunch of things we have now seen in the product that we thought we got mostly right,” Katzenberg said, “but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’”
Despite the rough start, Katzenberg said he’s optimistic. Eighty percent of Quibi’s viewers complete the episode they are watching. Once daily life goes back to normal, he said he thinks people will go back to using their phones in ways that prompted him and his investors to bet on Quibi.
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Digi-cultural trend analyst Lauren DeLisa Coleman questions whether the Quibi format will prove sustainable for “fickle” millennial and Generation Z audiences.
“Subscribers are not only being asked for brand loyalty over all other streaming video offerings today but also at a price of $5 per month with ads or $8 a month without ads,” Coleman wrote for Moguldom.
“It’s a new world,” Coleman added. “Companies are giving away products and services or pivoting to create much-needed respirators. Jack Dorsey’s Twitter and Square are donating $1 billion to Global covid-19 Relief. Netflix is donating to the unemployed in Hollywood. Something about Quibi’s obsequious marketing push and buy-now pricing seems maybe a bit out of step with new approaches.”