Quibi shuts down: Why the $1.75 billion streaming app failed

Summary

An article by contributor Daniel Roberts, updated October 22, 2020, says Quibi, the short-form mobile video app, raised $1.75 billion in venture funding before its April launch and was shutting down just over six months later. It quotes the open letter from cofounders Jeffrey Katzenberg and Meg Whitman that they are winding down the business and looking to sell its content and technology assets. The article attributes the failure partly to launching on April 6 at the height of U.S. lockdown, with 1.7 million free downloads in the first week and then a sharp drop. It cites SensorTower data of 72,000 paying subscribers as of July, an 8% conversion rate from the 90-day free trial.

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Quibi shuts down: Why the $1.75 billion streaming app failed

Daniel Roberts · Contributor

Updated October 22, 2020 6 min read

Quibi, the short-form mobile video app, raised $1.75 billion in venture funding before its launch in April. Just over six months later, it’s shutting down.

In an open letter to employees and investors posted to Medium on Wednesday evening , cofounders Jeffrey Katzenberg (former DreamWorks Animation CEO) and Meg Whitman (former HP CEO) wrote, “It is with an incredibly heavy heart that today we are announcing that we are winding down the business and looking to sell its content and technology assets. Quibi was a big idea and there was no one who wanted to make a success of it more than we did. Our failure was not for lack of trying; we’ve considered and exhausted every option available to us.”

Quibi had investments from Alibaba, AT&T’s WarnerMedia, Comcast’s NBCUniversal, Disney, ViacomCBS, MGM, and Sony. It had a glitzy distribution partnership with T-Mobile. It had shows starring big-name talent like Chrissy Teigen, Jennifer Lopez, Reese Witherspoon, Liam Hemsworth, Tyra Banks, Joe Jonas, Chance the Rapper, Demi Lovato, and Andy Samberg.

So, why did Quibi fail so spectacularly?

Mike Sievert, President and COO at T-Mobile, and Quibi CEO Meg Whitman talk about the partnership between Quibi and T-Mobile during a Quibi keynote address at the 2020 CES in Las Vegas, Nevada, U.S., January 8, 2020. REUTERS/Steve Marcus

Launched during the pandemic

The premise of Quibi (short for “quick bites”) was original shows with episodes shorter than 10 minutes that people could watch on the go, on their phones. The company’s television advertising before launch put that pitch in a humorous context: a getaway car driver watching a Quibi video while his friends rob a bank; a man stuck in quicksand watching a Quibi video while he sinks.

But the app launched on April 6, at the height of U.S. lockdown during the COVID-19 pandemic. During lockdown, people were not on the go, riding public transit, or waiting for friends to arrive, or any of the other scenarios in which, prior to the pandemic, people might have wanted to be entertained by their phones for 10 minutes. Instead, people were at home, watching shows on fullscreen televisions. They were watching hour-long shows like “Tiger King” on Netflix.

Quibi did not even launch with an option to watch on your television.

The app saw 1.7 million (free) downloads in its first week, but then downloads dropped dramatically. After just 10 days, the app had fallen out of the top 70 free apps in the iOS App Store.

According to SensorTower data, Quibi had just 72,000 paying subscribers as of July, suggesting an 8% conversion rate from the 90-day free trial .

In an interview with the New York Times in May, Katzenberg blamed Quibi’s lackluster launch on the pandemic : “I attribute everything that has gone wrong to coronavirus. Everything.”

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