On Wednesday, the Wall Street Journal reported that streaming platform Quibi may be calling it quits after just over six months of operation.
JEN ROGERS: We've got a little bit of breaking news coming here, courtesy of the "Wall Street Journal." The "Journal" is reporting that Quibi is shutting itself down. This is a $1.75 billion invested in this company of Meg Whitman and Jeffrey Katzenberg, to give you short form videos. And the company, at a time when people are watching their screens more than ever, not able to survive.
Dan Roberts, I want to bring you in here. There were reports, multiple reports, earlier today that Quibi was considering this. But really, the Journal saying it's shutting down, going away.
DAN ROBERTS: Yeah, and Jen, also, we should also, Jen, credit that the tech site, The Information, is reporting that a call with employees making this official is about to happen in the next five minutes. None of this was very shocking.
You know, Melody Hahm, who is on the show right now, and I, we were saying back when this thing was about to launch that, you know, it didn't look like the revolutionary act that Katzenberg and Whitman were making it out to be.
Now, of course, Jeff Katzenberg mid-pandemic, about a month after Quibi had launched and was clearly failing, famously in "The New York Times" did a Q&A where he said, I blame the entire thing on the pandemic. Well, that's not quite a good excuse.
I mean, certainly, it did not help. It launched at a time, and viewable only on mobile phones, when everyone was doing laidback content on their couches, watching stuff on a full TV. And for the first two months, you couldn't even watch Quibi videos on a television.
So launching during the pandemic didn't help. But I am of the view that Quibi cannot completely blame the pandemic for its lack of success and its lack of subscriber excitement. I just think, you know, I'm not convinced people wanted to watch even 10-minute videos on their phones, whether on the subway or at a bus stop or in the bathroom, wherever it was that Quibi thought people were going to watch these things.
You know, 10 minutes even, which, you know, it's a quick bite, to me, that's long. You know? They're short form. There's three minutes. And then there's a full 30 minute or hour long show. So the premise was never that appealing to me.
As you mentioned, it raised $1.75 billion in VC money, mostly thanks to the sway and connections of Katzenberg and Whitman. Then it quickly began distributing that money to talent, signing people to shows. Most famously, there was a scandal when it came out that Quibi was offering Reese Witherspoon $6 million to narrate a nature show.
ESPN signed on to do a SportsCenter at Quibi and a number of other big broadcasters had shows set up. And as recently as a month ago, even when we saw the abysmal subscriber numbers, Quibi was still announcing new shows that it was planning, or second seasons of shows. And that never made much sense. And sure enough, it just hasn't really caught fire.
There have also been reports that Katzenberg first tried to sell the whole company to NBC Universal and to Facebook. They passed.
MELODY HAHM: Yeah, and Dan, worth noting that NBC Universal is an investor. So is AT&T's Warner Media. So is Walt Disney. So in addition to VCs, the media entertainment industry at large, the juggernauts, all poured some money into this, right? They figured, why not with Katzenberg and Whitman? They're such heavy hitters, and to a certain degree that it is destined to succeed.
Unfortunately-- it's pretty interesting if you think about it. The concept of a startup and the reason that a startup often is so successful is because they're forced to be scrappy, right? Is because they're trying to be really innovative in sort of unprecedented ways.
I think maybe one of the biggest curses for Quibi was that they were so well funded, that they were so kind of capitalized, that it never made them be resourceful, to a certain extent. They had already $150 million in ad revenue committed even before launch, even before any of the shows were on the platform.
And then the final thing here is there was an ongoing legal battle, too, of course, with Echo, which is a startup that actually took credit for the turnstile technology, which is the seamless way that you can go from horizontal to vertical on Quibi that they touted as really the cornerstone of their product.
And Echo was saying, hey, that's our product. We had meetings with Quibi, and they basically stole our IP. So that's something that has been ongoing. So I imagine there will be some sort of settlement coming out of this.
DAN ROBERTS: And just quickly, guys, that's so ironic, the lawsuit over that tech, because anecdotally, I have discovered, to my surprise, just two different people in my life who said that they had really been enjoying Quibi. And both pointed out the best part is how you can switch your phone and the screen automatically changes to match the new orientation of your phone. That tech was at the heart of the lawsuit. So that may have been the only valuable part of this company.
JEN ROGERS: My guess is you'll see the best parts of it. Whether or not it's that technology or a couple of the shows that hit, they will go other places and get picked up eventually. But again, the "Wall Street Journal" reporting Quibi is shutting itself down. As Dan Roberts said, the Information reporting that they are going to hold a call shortly.