Quibi launched its shortform streaming service amid great fanfare in April this year, but just six months later founders Meg Whitman and Jeffrey Katzenberg have announced it is to close. So, what went wrong?
There’s nothing that excites the trade press more than media eating itself. Such is the fever surrounding Quibi, the U$1.75 billion pay-TV streaming to mobile platform that is being shut down so soon after launch.
Amid claims of executive hubris and schadenfreude at the misfortune of Hollywood king-has-lost-his-crown founder Jeffrey Katzenberg and Republican and eBay billionaire CEO Meg Whitman – the inquest will concentrate on why the industry’s major content owners deemed this a good bet in the first place.
ITV and BBC Studios joined Disney, NBCUniversal, WarnerMedia, Viacom, Sony Pictures Entertainment, MGM and Lionsgate in the venture.
To many observers it comes as absolutely no surprise that Quibi failed. Many were deeply sceptical from the outset that a demographic not used to paying for TV would shell $5 a month to watch five- to ten-minute bites on their mobile while queuing for a coffee.
“Quibi tried to make a success of a couple of ideas that are still contentious,” says Nigel Walley, founder and MD of media strategy consultancy, Decipher.
“Firstly, the idea that vertical video could work for narrative story telling in anything other than a niche way was unproven and not well supported – we weren’t believers in it. Secondly, the idea that people would pay for vertical video entertainment is a nonsense. Vertical video is not a premium experience – so again we’ve never believed. They were going to have to do something amazing with the content to succeed over those two challenges, but they didn’t. The quality of the content was really poor. It was a disaster from start to finish.”
- Read more: Who’s winning the streaming wars?
Quibi struggled to attract subscribers, with the Wall Street Journal reporting in June that the company was on track to hit fewer than 2 million of its original 7.4 million target.
The most obvious reason for failure is Covid-19. Going full steam into the launch of a new streaming service was going to be hard in the face of existing and new OTT competition from the likes of Disney+, Netflix, Apple TV+ and HBO Max let alone for a model predicated on people going about their business as normal.
This is one of the reasons given by Katzenberg and Whitman themselves. In a statement they blamed the “changed industry landscape and ongoing challenges” for the business’ inability to operate in the long-term.
“For sure, timing didn’t help,” says PP Foresight analyst Paolo Pescatore. “Standing out in a crowded and extremely competitive market was going to be a tall order especially with fierce rivals that have far greater credibility and unique storytelling. Credit for trying something novel but ultimately there is a reason why others hadn’t launched something similar previously.”
Lockdown forced TV viewing upwards across linear as well as direct to consumer services but Quibi’s mobile-only play in this at home landscape was a mistake. The service could not be viewed on TV and did not even offer a tablet-optimised version.
“The idea that people would pay for vertical video entertainment is a nonsense. Vertical video is not a premium experience,” Nigel Walley, Decipher
The app’s limitations did not end there. “There is no option to add multiple profiles, meaning the app is exclusively for one viewer, which makes its $7.99 [without ads] a month price tag seem even steeper,” according to GlobalData analyst Danyaal Rashid.
It lacked the ability to share screenshots or clips on social media, which is an own goal in trying to score a youth audience, and it also lacked a breakout show, as AppleTV+ achieved with The Morning Show.
Katzenberg certainly knew the value of having original, quality content – but it was clearly not the right mix to attract millennials away from viewing and sharing video on social media sites like TikTok, Instagram and Snapchat.
Quibi launched with 50 titles – a mix of scripted and non-scripted food shows, sports and nature docs, plus news bulletins – but it is the narrative serials which were designed to capture headlines. The A-list of talent making drama originals included Liam Hemsworth, Ridley Scott, Doug Liman, Antoine Fuqua, Laurence Fishburne, Kevin Hart and Steven Spielberg.
Quibi spent $1.1 billion on content paying $125,000 per minute for some shows and not without some success. It landed ten nominations in short-form categories at the Emmy’s with Antoine Fuqua drama #FreeRayshawn winning two for actors Laurence Fishburne and Jasmine Cephas Jones.
Costs for talent and production value aside, the practicalities of producing video that would smoothly switch between horizontal and vertical positions was creating headaches for production teams.
Cinematographer Catherine Goldschmidt who shot Dummy, the first scripted show commissioned by Quibi to go into production, gave IBC365 a taste of the issues they were having to solve.
- Read more: Behind the scenes: Dummy
Quibi’s streaming technology is designed so that when a viewer flips between the horizontal (16:9) and vertical (9:16), there is no buffering. It does that by streaming two versions of the same show simultaneously, with different aspect ratios and identical soundtrack. This means producers had to deliver two versions of the show and, going back up the chain, the cinematographer needed to consider how to shoot a scene once but frame it twice. All of that was added expense.
Assets for grabs
Quibi is now trying to find buyers for its content and technology assets and return some of its investor’s money.
On the content side, Quibi’s failure to find a buyer for its business as a going concern foundered, according to the Wall Street Journal because unlike most services, Quibi allowed creators to own the non-mobile rights to the content it had funded.
This might make an immediate sale to principally TV-centric streamers like Disney, Netflix or NBCU unlikely, while IP owners like Fuqua could cash in after the mobile-only rights expire.
There is the added expense of formatting the content from vertical to horizontal to play back on TV screen. A 8 x 10-minute made for Quibi drama would need re-editing for longer form viewing. YouTube Premium might be the most natural home.
More fundamentally, there’s the question whether younger audiences want to watch 10-minute-long shows on their phones.
On the technology side, Quibi’s signature ‘Turnstyle’ screen feature, which allows viewers to switch between landscape and portrait viewing on mobile, remains mired in a legal battle over intellectual property. In an initial ruling, a U.S. Court ruled in favour of Quibi over interactive-video company Eko’s claim of patent infringement but the suit is ongoing.
“It’s hard to see significant interest in this tech that is unproven and remains niche,” says Pescatore. “Nonetheless, big tech companies will be sniffing around and we shouldn’t rule out interest among consumer electronic providers. Samsung recently launched its own rotating screen The Sero. Others may want to follow suit.”
With video streaming forecast to constitute 79% of all mobile network traffic by 2022, you can see how investors could be persuaded the platform had potential.
The cratering of Quibi, pandemic not withstanding, will have the industry scratching its heads, especially in comparison to live social broadcasting platforms like Twitch which have rocketed under lockdown.
“At the end of the day it is all about content,” says Pescatore. “Quibi’s inability to create great stories in a way that connects with an audience led to its demise.”
Katzenberg and Whitman bravely acknowledged this. Quibi failed they suggest “because the idea itself wasn’t strong enough to justify a standalone streaming service.”