- Quibi, a short media streaming company, will shut down soon.
- Lack of subscribers, pandemic, and tough competition led to its fall.
- Company leaders gave COVID-19, business model as reasons for its short run.
Quibi, a short-form mobile-native video platform will be shutting down soon. Once a touted startup and have bagged some of the biggest names in Hollywood, the quit comes as a surprise. Quibi Holdings LLC’s streaming service had a run for mere six months. In this short span of time, Quibi managed to raise $1.8 billion from numerous private equity, venture capital institutions, and Hollywood. Some of its investors were Alibaba, Madrone Capital Partners, Goldman Sachs, JPMorgan, Disney, Sony Pictures, Viacom, WarnerMedia, MGM, etc.
What led to the failure?
The streaming service pitched up shows in a short 5-10 minute chapter formatted to fit the smartphone screen. But since the pandemic has begun, they found it difficult to hold consumers with an on-the-go subscription. Eventually, they had to allow subscribers to view content on their TVs. It has been plagued with troubles since April, where it faced sub-par viewership and a lawsuit from a strong rival, Eko.
The CEO of Quibi, Jeffery Katzenberg states that “the failure was not due to a lack of trying.” Meg Whitman, Chief Executive, adds that they have considered and exhausted every available option. They decided to shut down the company and not prolong it and risk more losses. They aim to return as much as $350 million left to the shareholders and investors.
According to reports, the company will lay off employees with severance pay. Quibi is exploring selling rights of some of its media and content to other media and technology companies. Even though COVID was a big factor leading to this decision, Quibi was a skeptic of its share in the media world. This was due to the fact that consumers already had free options like YouTube. Some executives believe that Quibi could have taken a freemium approach instead of a subscription for all.
The company had spent aggressively on its content development, such as a court show featuring Chrissy Teigen, a romantic comedy starring Anna Kendrick, and an action thriller featuring Christoph Waltz and Liam Hemsworth. The service also attracted several blue-chip advertisers such as PepsiCo Inc., Anheuser-Busch InBev SA, and Walmart Inc. It raised some $150 million from ad revenues before its launch.
The app has been downloaded some 3.5 million times and has an active user base of 1.5 million subscribers. The company has expanded in Australia with a slight tweak in its business model. But the streaming app’s launch hasn’t gone as planned due to coronavirus challenges.
