Quibi, lessons learned
Like many media observers, I was intrigued by the initial Quibi (for “quick bites” and pronounced quibby) offering. The next big thing was going to be a platform dedicated exclusively to scripted mobile content capitalizing on the ever-growing amount of time consumers were spending on their phones and tablets.
I was so taken by the concept that I even wrote an article about it.
Quibi finally saw the light of day, championed and led by masterminds Jeffrey Katzenberg and Meg Whitman, in early 2020, just a few short weeks after the pandemic really got underway, with the lights going out a mere six months later and US$2 billion from investors gone with the wind.
Sad to say that the only next big thing Quibi turned out to be, was one of the biggest audiovisual fiascos in history.
No business know-how
What’s really surprising was how world-renowned executives like Katzenberg (co-founder of DreamWorks Animation) and Whitman (former CEO of Hewlett Packard) failed so miserably in a venture that seemed so much in line with the spirit of the times.
Surprising at first that is, but considering the decisions made in the months before and after the launch, not surprising at all.
Indeed, Quibi’s downfall was the result of too much capital going into an initiative that should have been nurtured on more modest means. The audiovisual landscape is gorged on content, scripted and unscripted, produced by creators and distributed worldwide, that manages to attract huge audiences at a fraction of the cost.
Quibi appropriated that model then turned it on its head. Katzenberg and Whitman also recruited Hollywood producers and Hollywood stars at Hollywood prices to produce TV-type episodes lasting 5 to 10 minutes. According to Bloomberg Businessweek, Quibi’s marquee projects cost up to US$125,000 per minute to produce. The #FreeRayshawn series, produced by Antoine Fuqua and starring Laurence Fishburne and Stephan James, came in at US$15 million for 15 episodes...of 10 minutes each.
It was a case of world-class executives with decades of experience running massive multinational corporations believing that you could create a successful startup by simply injecting colossal sums of money into it without any kind of market validation whatsoever.
First off, Quibi’s launch as a subscription-based streaming platform on April 6, 2020, was a major disappointment. Americans in lockdown had quickly changed their content consumption habits, moving in droves to platforms like Netflix, Hulu, HBO Go, Disney+, or Apple TV+ that were available on their big-screen TVs.
Quibi’s founders stuck to their guns insisting that their content could be viewed only on mobile and making it impossible to take screenshots while viewing. Which made it impossible for consumers to share their viewing experiences on social media or even with family and friends.
For many observers, including Christian Stadler at Forbes, Quibi made the fatal error of positioning itself mid-market – halfway between streaming services and platforms like TikTok – without even really knowing the reasons why or how.
A platform with zero social media potential, badly positioned, and counting on rapid growth during a major health and economic crisis, simply didn’t have what was needed to succeed.
An odd way of dealing with risk
Every start-up comes with its share of risk. But for Katzenberg, Whitman, and the investors whose US$2 billion evaporated like the morning mist, the mismanagement of risk, from launch to bankruptcy, reached stratospheric levels rarely seen even in the audiovisual sector.
Oddly enough, while Quibi was risking huge sums willy-nilly in its speculative business model, very little risk was taken in terms of content. Name producers and actors, working together with time-tested formulas, without any originality or any risk, guaranteed that there would be little to nothing to remember after they turned off the lights for the last time.
Unlike once-emerging platforms like YouTube and TikTok, which showcased new talent and new forms of expression, Quibi’s scripted and creative edge was dull all around. Quibi’s double-or-nothing bet was made on force-fitting run-of-the-mill Hollywood formats into 7-minute segments, an unfortunate value proposition that managed to attract only a few million free subscribers, of which a paltry 100,000 switched to paid format after 6 months.
As Tom Jarvis wrote in The Drum, with more than a touch of irony, “Quibi sold Betamax tapes as hard as it could.”
Quibi is the hard to believe yet true story of how some really smart people sank $US2 billion into a business that ended up generating the sales of a mom-and-pop operation. It’s a reminder of just how important it is to first define a market, and then validate and test its business model, before making a major investment in an innovation that really wasn’t that innovative after all.
The bigger they are, the harder they fall.