Inside Quibi's $2 Billion Fail – No, It Wasn't the Pandemic

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Inside Quibi’s $2 Billion Fail – No, It Wasn’t the Pandemic

Quibi goes down as one of the most infamous tech flops in recent memory

After just seven months and $2 billion, Quibi has became the first major casualty of the streaming wars.

The short-form streaming company founded by Jeffrey Katzenberg and Meg Whitman announced Wednesday that it will shutter its operations. Launched in April in the early weeks of pandemic shutdowns, the subscription service targeting teenagers and young adults never gained any traction for shows told in under-10-minute “quick bites” meant to be consumed on smartphones — despite the involvement of big stars like Kevin Hart, Anna Kendrick and Liam Hemsworth.

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The widely publicized (and widely mocked) upstart becomes one of the biggest and most expensive tech flops of the past 20 years. Below, TheWrap looks at the reasons for Quibi’s short lifespan.

1. The wrong people tried to predict viewing habits of younger consumers

Katzenberg is a longtime Hollywood executive responsible for the revitalization of Disney in the 1990s and for creating DreamWorks and bringing “Shrek” into our lives, while Whitman was a former Disney executive who made her mark in the tech world as CEO of eBay and later Hewlett Packard. But they are both in their 60s, far from the demographic they hoped to target with their new service.

And as it became clear on launch, millennials and Gen Z balked at a pair of older entertainment executives telling them how they should watch content. As Quibi sputtered last spring, free apps like TikTok took off as the platform of choice for teens.

Just look at all the longtime entertainment execs that have, or will walk, out the door this year: Kevin Reilly, Bob Greenblatt were ousted at WarnerMedia after former Hulu CEO Jason Kilar took over, while Peter Roth is ending a 20-year tenure atop Warner Bros. TV Group next year.

2. The name never clicked

Quibi had a marketing challenge that started with its name. What’s a Quibi? For most people, that was a mystery. And unlike Google, which basically invented online search (and soon became synonymous with the idea), Quibi was a late entry into a streaming space that was already well defined.

Officially, the name stood for “Quick Bites,” and was meant to underscore the app’s short 5- to 10-minute episodes. But getting “Quibi” to catch on was a struggle. The company tried pushing the name in its marketing from the outset — “Just a Quibi, Mr. Chance,” a restaurant manager, when asked how long a wait would be, told Chance the Rapper in one commercial — but it failed to resonate.

“A lot of my friends have no idea about it,” one earlier user told TheWrap in May. Others were just confused by the name and what the app was about. Another person told TheWrap they “thought Quibi was more [of] a video-editing app.” This was a common refrain.

3. The mobile-only strategy backfired

Quibi’s executives were adamant from the start — this app is for on-the-go viewing. CEO Meg Whitman said, on multiple occasions, that Quibi’s shows were ideal for morning commutes or waiting in line at the grocery store.

In one sense, the bet on mobile-first viewing made a fair amount of sense. As Whitman told TheWrap last year, millennials watch 60 minutes of video content on their phones per day on average. But when the app launched in April, users were jarred by the realization it was mobile-only. No smart TV app, and no option for users to cast it to their smart TVs.

“I was watching [Quibi] on my iPhone, and usually with other streaming services you can mirror [the content] to your TV. But there wasn’t a setting where I could watch it on my smart TV,” Jhadira Sauceda, an early Quibi user, said. “Sometimes I just want to hang out in my room and switch from watching on my phone to the TV.”

By not offering a TV option, Quibi cut into the time users actually spent watching the app. This was exacerbated by the fact people were spending more time at home, and watching more TV, due to COVID-19 lockdowns. Quibi eventually added AirPlay and Chromecast functionality a few months after launch, but by that point, the app’s free April trial was up. Having that option from the start would’ve been a big help.

4. No screenshots = no word-of-mouth

Quibi really could’ve used some positive word-of-mouth. But that was hampered by another key design flaw. The app blocked users from screenshotting its content, effectively undermining any chance users would share their favorite show moments over text or on social media.

For a mobile-focused app, this was a killer shortcoming. It guaranteed Quibi’s shows had no chance of reaching meme-status on Twitter, Instagram or Facebook in the same way Andy King from the “Fyre” documentary, or a number of “Tiger King” memes, did during the early days of the pandemic. It also curtailed subscribers’ ability to interact with the content and organically attract new eyeballs. For an app that struggled out of the gate to win over viewers, that’s not ideal.

Again, Quibi tried to fix a self-inflected error months later by letting users screenshot content — but even that was a mess, with Quibi coming up with its own unique way for users to perform a simple task.

5. Quibi shows were critically ravaged

Speaking of word-of-mouth, the early word from critics was not at all kind although the service was able to garner a pair of Emmy wins in the short-form categories for the crime drama “#FreeRayshawn.”

Despite boasting an A-list roster of creatives both in front of and behind the camera like Steven Spielberg, Jennifer Lopez, Chrissy Teigan, Anna Kendrick and LeBron James, the service’s debut shows were all pilloried by critics. It didn’t help that reviews featured headlines like “Yep, Quibi Is Bad,” “Quibi is YouTube for people who hate YouTube” and “Quibi was meant to revolutionise entertainment. Why is it so bad?”

Quibi was able to get so many A-listers on board largely through its unique licensing deals, which gave ownership of the shows to the studios and creators. Here’s how that worked: Quibi had a licensing rights to shows for seven years, but the studio had the option after two years to re-cut the content into a full movie or show, and sell that elsewhere.

When Quibi tried to find a buyer, it technically had nothing to sell — which likely hastened its sudden downfall.

6. The pandemic threw a massive wrench into launch plans

Quibi’s success largely centered on the idea that people who lived in major cities like New York and San Francisco would want something to watch during their commute to work, or while they were waiting in line at Starbucks. Unfortunately, the coronavirus pandemic shrunk everyone’s work commute down to moving from the bed to the dining room table.

In their open letter announcing the shutdown on Wednesday, Katzenberg and Whitman predictably blamed the pandemic as a reason for its failure — though they also noted that other new streamers have seen steady growth at the exact same time. In fact, Netflix and upstarts like Disney+ and HBO Max have credited coronavirus sheltering-in-place for boosting subscriber counts and viewership times.

“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,” the two wrote. “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.”

7. The streaming field is just too crowded

Quibi’s launch was sandwiched between those of five other major streaming services. Apple and Disney debuted their services last November, and WarnerMedia and NBCUniversal launched their offerings in May and July, respectively. When you add in the players already on the field like Netflix, Hulu, Amazon Prime and smaller services like Showtime OTT and CBS All Access… that is a lot of streaming services.

Most experts predicted that people would subscribe to between four and six different services, so that meant someone was going to be on the outside looking in. Disney, with its impressive library of Marvel and Pixar, launched with a new “Star Wars” series; Apple TV+’s service was tacked onto its customer’s device purchases; HBO Max was made free for the 20 million or so that already subscribed to HBO; and Peacock was free.

8. The price was a turnoff

Potential subscribers balked at the cost of Quibi. The service offered a $7.99 ad-free tier ($1 less than Netflix’s basic tier) and another ad-supported subscription — but subscribers had to pay $4.99 per month for that version, too.

It was a bold move, especially since viewers hadn’t shown they were willing to pay for bite-sized mobile content prior to Quibi’s debut. Katzenberg and Whitman were betting Quibi’s shows would attract enough viewers to pay up, but that wasn’t the case. Once Quibi’s free three-month trial expired in July, only 8% of the people who signed up in the app’s first days decided they would stick around and pay for it.

Quibi, when compared to other streamers, felt “a little expensive,” Omdia analyst Sarah Henschel told TheWrap. “Short-form mobile-oriented content should likely be priced a little lower.”

It also didn’t have a vast content library to lure potential subscribers — no familiar hits like like “Friends” (now on HBO Max) or “The Simpsons” (now on Disney+). Despite offering a 90-day free trial, Quibi was hard pressed to give customers a reason to subscribe.

Sean Burch