Quibi Shutting Down Six Months After Launching

Quibi, the short-form subscription video service launched in April by DreamWorks Animation founder Jeffrey Katzenberg and eBay founder Meg Whitman, is ceasing operations.

Katzenberg informed investors Oct. 21 about the shutdown, according to The Wall Street Journal, which cited people familiar with the situation.

Later that day, after the Wall Street Journal report, Quibi confirmed the shutdown on the Medium website, in “an open letter to the employees, investors, and partners who believed in Quibi and made this business possible.”

“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,” Katzenberg and Whitman said in the letter, which bore both of their signatures.

Katzenberg has hired a reorganization firm to help sell Quibi assets after the entertainment mogul was unable to sell the platform to NBCUniversal — which acquired DreamWorks Animation in 2016 for $3.8 billion. Quibi reportedly didn’t own most of its original programs, which undermined sale efforts.

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The service targeted mobile-device users with original programming from five minutes to 10 minutes in length — and was backed by a $1.75 billion content war chest. Despite the hype and big-name talent (Anna Kendrick, Chrissy Teigen, Christoph Waltz and Liam Hemsworth, etc.) associated with content production, few consumers opted in beyond the free trial period.

Analysts suggested just 8% of initial free Quibi trial users converted to paying subs in the first month. Katzenberg, in media interviews over the summer, attributed the sluggish start to the coronavirus pandemic and the fact many potential subscribers were stuck at home watching TV instead of their mobile devices. Even worse, Quibi content was only available on portable devices — not televisions — at launch.

The app lasted a fraction of the time of Verizon’s $1 billion cellphone-based video misstep, go90, which shuttered in 2018 after three underwhelming years.

In the letter, Katzenberg and Whitman wrote, “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…. We opened the door to the most creative and imaginative minds in Hollywood to innovate from script to screen and the result was content that exceeded our expectations. We challenged engineers to build a mobile platform that enabled a new form of storytelling — and they delivered a groundbreaking and delightful service. And we were joined by ten of the most important advertisers in the world who enthusiastically embraced new ways for their brands to tell their stories. With the dedication and commitment of our employees and the support we received from our investors and partners, we created a new form of mobile-first premium storytelling.

Jeffrey Katzenberg, Meg Whitman at PGA event June 8 in Los Angeles

“And yet, Quibi is not succeeding. Likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing. Unfortunately, we will never know but we suspect it’s been a combination of the two. The circumstances of launching during a pandemic is something we could have never imagined but other businesses have faced these unprecedented challenges and have found their way through it. We were not able to do so….

“We want you to know that we got up every day and genuinely loved coming to work with the most remarkable and passionate team that we have ever assembled. We will be forever proud of the extraordinary partnership we were able to forge between the best of Hollywood and Silicon Valley. All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down. We cannot thank you enough for being there with us, and for us, every step of the way.”

Report: Quibi Exploring Sale/Merger Options

Quibi, the mobile-centric subscription streaming service launched in April by Jeffrey Katzenberg and Meg Whitman, is reportedly looking to go on the sale block or seek acquisition with a private equity group.

The Wall Street Journal, citing sources familiar with the situation, reported Katzenberg, who co-founded and sold DreamWorks Animation, and Whitman, former CEO of eBay, are exploring all options after the service failed to meet subscriber and advertising goals.

Publicly, the two executives say they remain confident in the platform and a “new form” of storytelling.

Indeed, the $4.99 monthly service with ads ($7.99 without ads), backed by $1.75 billion in venture funding, launched with a series of original short-form videos, including Emmy-winning “#FreeRayshawn,” a drama about a black Iraq War veteran (Stephan James) who finds himself the target of a SWAT team for a crime he didn’t commit.

Yet, data firm Sensor Tower has suggested the service will generate less than 2 million subcribers by the end of the year — a fraction of the company’s 7.4 million year-end goal.

“We are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees,” Katzenberg and Whitman said in a joint statement.

SVOD Pushing LGBTQ Programming, Demand

TV shows and movies featuring gay and/or transsexual characters have seen a boom on subscription streaming video services. New data from Ampere Analysis suggests SVOD platforms are leading the way in commissioning LGBT+ content. Between Q1 2019 and Q2 2020, 12 services globally ordered multiple LGBT+ movies or series. 80% of those commissions were destined for on-demand platforms, with public broadcasters such as the BBC and France Télévisions also favouring on-demand delivery for series with LGBT+ themes.

Linear TV operators were more likely to opt for one-off TV specials on LGBT+ topics than commit to long-form series. While SVOD services such as Netflix and Amazon have the advantage of global reach when it comes to finding an audience for LGBT+ shows, their LGBT+ catalogs remain majority U.S.-sourced, but this looks set to change as LGBT+ content produced internationally catches the attention of the major SVOD players.

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“Netflix and Amazon Prime Video’s originals ‘Orange Is the New Black’ and ‘Transparent’ confirmed the appeal of LGBT+ themed content beyond the LGBT+ community,” analyst Alice Thorpe said in a statement. “Now queer content is an expected part of new SVOD services’ offerings, as we’ve seen with newly launched platforms like HBO Max, Peacock and Quibi.”

London-based Ampere found 18- to 34-year-olds are the most likely to identify as part of, and be accepting of, the LGBT+ community. This audience also over-indexes for subscribing to SVOD services. HBO Max has commissioned as many series about LGBT+ people in the past 12 months as its pay-TV channels have in the past three years.

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These titles include comedy drama series “Beth & Sam” and “Drama Queen.” The platform also has LGBT+ movies in the pipeline, such as YA novel adaptation “I’ll Be the One” and “We Were There, Too,” from Gloria Calderón Kellett and Natasha Rothwell.

With three upcoming series, “Expecting,” “Clean Slate,” and a reboot of the iconic British series “Queer as Folk,” Peacock’s LGBT+ content equates to 7% of its entire original commissions slate to date.

Although Netflix and Amazon have seen the proportion of their global TV catalogs that is sourced from U.S. producers decline to around 29% and 31%, respectively, this is not the case for LGBT+ TV content.

LGBT+ TV shows on Netflix skew 65% American-produced. On Amazon it’s 58%. One of the reasons for this is likely to relate to the risks associated with producing such content overseas. For instance, recently the Turkish Netflix original, “If Only,” was denied filming rights by the country’s government because it featured a gay supporting character.

In general, however, LGBT+ shows resonate across many territories and offer great potential for international distribution.

“One aspect of LGBT+ content’s specific appeal is its ability to travel across territories and inspire fandom,” Thorpe said. “This allows characters to travel into spin-off series as we’ve seen in Spain and Mexico. The international players are staring to acquire some of this locally produced content and we expect to see more of it on the SVOD platforms in the coming quarters.”

Indeed, Spain’s Atresmedia’s long-running series, “Amar es para siempre” spawned modern-day drama “#Luimelia.” Commissioned for the group’s premium SVOD tier, Atresplayer Premium, it has already been renewed for a further two seasons. HBO Max recently acquired the platform’s original bioseries “Veneno,” about the life of the Spanish singer and trans icon.

In Mexico, Televisa’s “Mi marido tiene familia” spawned “El corazon nunca se equivoca,” a series about a young gay couple aimed at a teen audience. Elsewhere, Colombia’s RCN has “Lala’s Spa,” starring trans actress Isabella Santiago in production. In Brazil, Globoplay is working on a bioseries about Marielle Franco and Amazon has original September in the works.

The Korean market has been more conservative than APAC countries like Thailand and Japan where LGBT+ content is more common. However, the tide is changing and recently more well-rounded LGBT+ characters have appeared, for instance in jTBC’s “Itaewon Class.” This became the third-most-watched show in the broadcaster’s history in Q1 2020. The international platforms have spotted untapped potential in Korean content, with series such as “Where Your Eyes Linger,” recently acquired by Netflix for its Korean service.

Quibi Testing Ad-Supported Service in Australia, New Zealand

Upstart mobile-centric subscription streaming video platform Quibi has reportedly begun offering free ad-supported service in Australia and New Zealand. The SVOD service launched April 6 in the United States from DreamWorks Animation founder Jeffrey Katzenberg and eBay founder Meg Whitman.

With The Wall Street Journal in June reporting Quibi would generate less than 2 million paid subscribers by April 2021, the platform is apparently trying AVOD to jumpstart consumer traction. The service had projected 7.4 million paid subs after one year of operation.

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Quibi costs $4.99 monthly in the U.S. with advertising; $7.99 without ads. The AVOD trial is reportedly being rolled out on a market-by-market basis.

AVOD has gained mainstream adoption following high-profile corporate acquisitions of Pluto TV by ViacomCBS and Tubi by Fox Corp., respectively. Pluto claimed 33 million average monthly viewers through June 30.

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Tubi in February claimed 25 million average monthly users, with users supposedly watching 163 million hours of content in December — which was an increase of 160% from the previous-year period.

Regardless, Quibi needs to gain user traction to justify nearly $1.7 billion in third-party funding. The platform has an unfortunate predecessor in Verizon’s short-lived go90 mobile-centric video streaming app that folded less than three years after launch, resulting in a $1 billion write-down by the telecom giant.

Quibi Gets Legal Win Amid Ongoing Consumer Indifference

Quibi, the $1.7 billion funded subscription streaming video service from DreamWorks Animation founder Jeffrey Katzenberg and eBay founder Meg Whitman, got a legal break from ongoing concerns about its underwhelming business model.

A Los Angeles District Court judge July 13 ruled against tech rival Eko’s claim that Quibi illegally uses its “turnstile” technology enabling users to alter how they watch video on portable devices by filling the screen whether the device is held vertically or horizontally.

“In short, Eko fails to make a clear showing of irreparable harm suffered by way of reputation and goodwill,” Judge Christina Snyder wrote denying Eko a preliminary injunction.

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Quibi heralded the decision, contending Eko never had a case, and alleging the litigation was an attempt at a payday.

“We will continue to aggressively defend ourselves,” said the streamer.

A lawyer representing Eko said the decision would be appealed.

“We look forward to presenting the merits of the case at trial, including our request for substantial damages,” Neel Chatterjee said in a statement.

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Regardless, Quibi, which offers subscribers access to original content no longer than 10 minutes in length for $4.99 (with ads) and $7.99 (without ads), has struggled to retain subscribers. The service claims its app has been downloaded more than 5.6 million times since the April launch. How many are active subscribers has not been disclosed.

Quibi Announces Executive Pay Cuts Amid Layoff Rumors

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.”

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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.”

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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.

Katzenberg Blames COVID-19 for Quibi’s Slow Start

With 3.5 million app downloads (and 1.3 million active users) since launching on April 6, streaming video platform Quibi is not Disney+, Netflix, or even Acorn TV. And with billions of dollars in backing, the ambitious start-up from DreamWorks Animation founder Jeffrey Katzenberg and former Hewlett-Packard CEO Meg Whitman finds Katzenberg on the defensive.

In an interview with The New York Times, Katzenberg laments how the coronavirus pandemic and resulting nationwide home quarantines undermined the Quibi app’s mobile-centric target user.

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“I attribute everything that has gone wrong to coronavirus. Everything. But we own it,” Jeffrey Katzenberg told The Times.

Since its launch, Quibi (which stands for “quick bites”) offers original video content from big-name talent and directors no longer than 10 minutes in length. After debuting in the top three app downloads, the platform now ranks 125th, according to Sensor Tower.

“Is it the avalanche of people that we wanted and were going for out of launch? The answer is no. It’s not up to what we wanted. It’s not close to what we wanted,” Katzenberg said.

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Indeed, while attributing business failure to a pandemic seems easy, some observers contend Quibi’s mobile-only platform was doomed regardless of COVID-19.

“Quibi’s failure is due to its restrictive nature,” Danyaal Rashid, analyst with Global Thematic Research, said in a note. “The platform only supports mobile viewing and short-form video; the content library is weak compared to larger streamers; and at $7.99 (€9.05) a month [without ads], it is expensive – Disney+ is just $6.99 a month.”

Quibi has also been sued by Israeli tech company Eko, which claims the app’s technology enabling users to watch video either in vertical or horizontal position on their cell phone, is their invention.

“This is a case to stop the theft of Eko’s technology by Quibi, alleging a civil action for patent infringement under the patent laws of the United States, and misappropriation of trade secrets,” Eko alleged in a complaint filed March 10 in U.S. District Court in Los Angeles. Quibi has filed a countersuit.

Meanwhile, Whitman remains more positive. In a May 11 interview with CNN Business, the former GOP California gubinatorial candidate said Quibi is a new brand with original content attempting to attract millions of eyeballs.

“We came to market with no library, no legacy product and we’re starting from scratch,” Whitman said. “I know how hard it is to gain people’s attention, particularly in a pandemic. But I feel really good about where we are, even though we’re five weeks old.”

Maybe, but Verizon felt equally confident about its mobile-centric entertainment app, go90, which launched in 2015 with original content from Ben Affleck, Matt Damon and Kobe Bryant’s Oscar-winning short, Dear Basketball. It shuttered less than three years later with losses reaching $1 billion and Verizon CEO Lowell McAdam retiring.

HBO Max Offering 20% Discount on Subscription Pre-Orders

WarnerMedia is offering a 20% discount to new subscribers who preorder the HBO Max subscription streaming service before its May 27 launch date. The $11.99 discounted price is less than Netflix’s standard plan for new subs.

WarnerMedia has a lot riding on the launch of the platform — especially during a pandemic. The former Time Warner company has inked distribution deals with Charter Communication and Hulu, in addition to offering free access service to existing HBO Now and HBO Go users.

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The promotion is good for a year and then automatically increases to the standard $14.99 plan unless canceled. Discounted Max is less expensive than a HBO Now subscription, except that Now subs get automatic access to Max when it launches.

Details of the promotion include having to sign up for Max through the platform’s website and not a third-party service such as Roku, Apple TV Channels, Amazon Channels or Google Play. HBO Now subs on Apple TV and Google Play get free Max upgrades — at the standard $14.99 price.

The discount underscores the reality Max is the most expensive SVOD service in a crowded over-the-top ecosystem. By comparison,  Apple TV Plus is $4.99 monthly, Disney Plus ($6.99), Quibi ($7.99 without ads), Amazon Prime Video ($8.99 a month), NBCUniversal’s Peacock ($9.99 without ads), CBS All Access ($9.99 no ads), Hulu ($11.99 without ads).

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Quibi Tops 2.7 Million App Downloads

Quibi has added another 1 million app downloads to reach 2.7 million downloads since launching in North America on April 6. The $4.99 monthly ($7.99 without ads) streaming video service for mobile devices is the brainchild of DreamWorks Animation founder Jeffrey Katzenberg and former HP chief executive Meg Whitman.

While consumer interest pales in comparison to Disney+ and Netflix, the uptick in downloads comes as Quibi is offering 90 days of free service to subs signing up before April 30. The platform has distribution deals with Google and T-Mobile, and reportedly sold out its entire $150 million ad inventory for 2020.

In a interview with Reuters, Katzenberg said the platform would soon be accessible through streaming devices to the television. Currently, Quibi, which stands for “quick bites,” is limited to portable media devices. With millions of commuters quarantined in their homes due to the coronavirus, Katzenberg hopes to have TV access by next month.

“Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch,” Katzenberg said in the interview.

Is Quibi Interest Waning?

Launched April 6 with much fanfare and $1.75 billion in investment backing, mobile-centric video streaming platform Quibi generated 1.7 million app downloads during its first week, ranking sixth on Google Play through April 9 and 20th among free apps on Apple’s App Store.

That excitement appears to be slowing as the $4.99 monthly service ($7.99 without ads) from DreamWorks Animation founder Jeffrey Katzenberg and former Hewlett Packard and eBay CEO Meg Whitman now ranks 57th on the App Store, while dropping five spots to 20th on Google Play — behind notable rivals Netflix and Disney+.

Not surprisingly, the No. 1 app on Google Play is the Zoom video conferencing platform increasingly used by companies to interact with employees and staff during social distancing and shelter-in-place guidelines due to the coronavirus pandemic.

Quibi, which is short for “quick bites,” offers original movies and TV shows in eight-to-10-minute snippets on a mobile device from ‘A’-list directors such as Steven Spielberg, Antoine Fuqua and Guillermo del Toro.

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At the same time, condensed video content for mobile consumers appears to have lost its targeted audience as intended users working from home watch TV — the latter distribution channel unavailable to Quibi content.

“Quibi marketed itself as a companion for [entertainment gaps] people have throughout a normal day — perhaps on a commute or waiting in line for lunch,” Danyaal Rashid, analyst at GlobalData, wrote in a note. “However, amid a pandemic and global lockdown, things are far from normal and people are just not experiencing these ‘moments.'”

Rashid said people at home are less likely to watch videos on their phones rather than on a full-size TV. In addition, the analyst said Quibi offers no option to add multiple profiles, which means the app is exclusively to only one user — making its subscription price seem more expensive than the competition.

“Quibi’s main competitor is social media, rather than other streaming apps,” he wrote. “Again, timing seems to be Quibi’s downfall here. People are using this lockdown to capitalize on the creativity and connection they can glean from social media apps, while Quibi offers only curated content.”

Indeed, Rashid said TikTok, the Chinese-owned social media app for making and sharing short videos, is adding staff due to the surge in demand due to the pandemic.

“[Meanwhile], Quibi is left scrabbling for a foothold,” he wrote.

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The situation is not dissimilar to Go90, Verizon’s short-lived $1 billion mobile entertainment app that shuttered about a year after launching in 2015 with original content from Ben Affleck, Matt Damon and the late Kobe Bryant’s Oscar-winning animated short film Dear Basketball, among others.