(Bloomberg Opinion) -- Quibi’s day of reckoning is coming. It’s not looking good.
When the short-form video app launched in April, Quibi gave users an extra-generous 90 days of free service rather than the typical two-week or one-month trial period. Those 90 days are up beginning July 5, and it’s at that point Quibi will discover how many of its earliest, most enthusiastic signups will become paying customers. So far, all indications are that there won’t be many. Quibi is on pace to have fewer than two million paying subscribers by the end of its first year, only 27% of its original goal, according to a Wall Street Journal article Monday.
For Quibi, a startup trying to compete with established media giants in the streaming wars, its first few weeks have been more difficult than most. Quibi’s pitch was that it was taking Netflix Inc.’s reinvention of television viewing one step further: It would be mobile, and its name — an attempt at a clever portmanteau of “quick bites” — alludes to the fact that all the content is split into episodes that are no longer than 10 minutes each. It was looking to attract on-the-go viewers who are short on time. But then, suddenly, no one was going anywhere. The Covid-19 pandemic hit and Quibi quickly bit the dust.
While TikTok, YouTube and Instagram are near the top of Apple’s app charts, Quibi is near the bottom. Other services such as Netflix and Disney+, which are more suited to longer periods spent binge-watching on a proper TV set, have also experienced a surge in subscribers during the crisis. It’s not only that Quibi’s short-form videos are more tailored to pre-pandemic life — it’s also that some of its content just isn’t that enticing. As the only app of its kind, it might have been good enough before the crisis, as it wouldn’t necessarily have had to compete head on with Netflix types. But it’s clear now that the company could have produced a better catalog of shows and movies, instead of placing so much emphasis on the app’s use cases and Turnstyle tech feature. In trying to become a mashup of Netflix and Instagram, it borrowed the brevity of social-media content and left out the human-connection aspect just as people were craving more of both. Even as the U.S. reopens, it may be too late for Quibi to spend what would be needed to make another big push at luring subscribers.
Built by Jeffrey Katzenberg, a Walt Disney Co. movie veteran who co-founded DreamWorks SKG (with Steven Spielberg), and Meg Whitman, a longtime technology executive known for growing EBay Inc. and leading Hewlett-Packard, there were high hopes for Quibi under their leadership. That didn’t prevent Quibi from becoming a target of ridicule early on in some corners of Twitter for its name and for having the audacity to charge $5 a month while serving advertisements (or $8 without ads). For comparison, Disney+ costs $7 and has no ads. Even so, enough boldface names from Hollywood and the entertainment world had signed on to Quibi to create the sense that it was perhaps an underestimated challenger. There was Spielberg, Reese Witherspoon, Idris Elba, Laura Dern, Jon Favreau, Liam Hemsworth, Dwayne “The Rock” Johnson, Chrissy Teigen, Steph Curry, and on and on. Quibi also managed to raise nearly $2 billion from large investors including Alibaba Group Holding Ltd. and some of the top movie studios.
The pandemic’s resulting stay-at-home orders didn’t cause Quibi’s problems as much as they exposed them. The Wall Street Journal article pointed to Katzenberg and Whitman’s clashing leadership styles as one ongoing source of tension. The need to conserve cash is another, with the company’s senior executives taking a 10% pay cut. Some advertisers including PepsiCo Inc., Taco Bell, Anheuser-Busch InBev SA and Walmart Inc. are already seeking to renegotiate their terms in part because of concerns over low viewership on Quibi, the article said.
The Quibi team saw the app’s Turnstyle feature as a big selling point — “groundbreaking,” as Whitman has described it. When a user rotates their phone between portrait and landscape mode, they get different viewing angles of the same scene. It’s a neat feature, but one that’s just as easy for the average user to overlook or forget about, or just get lazy about using. The company is also facing a patent lawsuit over that same technology, and the suit is being financed by Paul Singer’s hedge fund, Elliott Management Corp.
Before its launch, Quibi was the talk of the town, even if it was a punchline in some cases. More than two months into its launch, Quibi is forgettable.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.
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