June 3, 2020
Mobile streaming service Quibi, still reeling from anemic subscriber numbers following its April 6 launch, announced senior executives have agreed to take a 10% pay cut while disputing rumors that it was contemplating layoffs.
In a report published by Deadline, Quibi founders Jeffrey Katzenberg and Meg Whitman sent an internal memo to employees saying the reports of the company’s financial troubles were overblown. The Wall Street Journey had been reporting the company was exploring laying off 10% of its 250-person workforce.
“Quibi is in a good financial position,” stated the memo, which was printed in full by Deadline. “We will look for ways to tighten our belt. We are not laying off staff as a part of cost saving measures. We’ve recently added a dozen new Quibi employees.
“And in regard to tightening our belt, our senior leadership team has volunteered to take a 10% pay cut because it’s the right thing to do.”
The memo further stated that the executives were “proud of the work that Jim Toth and the Content team are doing every day. Their integrity and commitment to their work is unparalleled and we are fortunate to have them on our team. They have delivered compelling content that is working great with our audiences.”
The memo also blasted a story by the New York Post claiming staffers were unhappy by Reese Witherspoon’s $6 million salary to narrate a nature documentary called Fierce Queens that has reportedly not generated the viewership to justify the cost.
“We are pleased with the performance of Fierce Queens,” the memo said. “The talent compensation was utterly inaccurate. We are grateful for Reese’s continued support of Quibi.”
Quibi, which derives its name from the term “Quick Bites,” is hoping to build a business model predicated on $4.99 monthly subscriptions ($7.99 for no ads) to access short-form content that can be enjoyed in 10-minute increments. Some observers have called the model inherently flawed in the age of YouTube, as viewers looking for a quick video distraction on their phones during a subway commute or waiting in line will likely not be interested in devoting full attention to the kinds of professionally produced programming offered by Quibi that is more in line with long-form binge-watching.
The format took an additional hit by launching during a global pandemic that has seen potential customers staying at home and not putting themselves in a position where a 10-minute video distraction would be of any benefit to them.
In just under two months, the Quibi app has been downloaded 4.5 million times, translating to 1.6 million subscribers — though many of those are subject to a 90-day free trial and have not yet paid fees to the service. Katzenberg in early May told the New York Times that the pandemic was the primary reason subscriber numbers have been below projections.
Quibi’s early programming has been fueled by $1.75 billion in investment capital, with many of the shows having already been renewed for multiple seasons. Advertisers have been asking to renegotiate terms in light of the lower viewership data, according to Deadline.
In addition, Quibi is being sued by Eko over the rights to the Turnstyle technology that allows Quibi programming to be viewed in either horizontal or vertical mobile modes.