Quibi Failure

Most startups fail, ideas turn out to be flawed, and some decisions backfire, really bad! But it doesn’t mean people shouldn’t dream or run after their passion.

In this series, we give you case studies that focus on startups that nearly succeeded and gradually failed where they went wrong and provide insights into how you can avoid making those same mistakes.


Quibi Failure

In the second part of the startup failure series, we talk about Quibi, a company that was run by two of the most powerful and influential executives in the US – Jeffrey Katzenberg (founder of Quibi, former head of Disney movie division in the ’80s and ’90s and co-founder of Dreamworks Animation) and  Meg Whitman ( Board member of Procter & Gamble and Dropbox, former president and CEO of Hewlett Packard Enterprise).

What is Quibi?

Quibi is a subscription-based streaming platform designed to deliver short-form scripted and unscripted content on smartphones. The name is a mixture of the words “quick” and “bites” pronounced “kwĭb-ee,” as its shows are around seven to ten minutes long. Quibi’s streaming service targeted a younger demographic.

The mobile-first subscription video service launched in the US and Canada in April 2020 after months of hype. It staked US$1.75 billion on expensive, star-studded shows, which were shorter than 10 minutes and were designed to be watched on mobile phones. It was just another new streaming service, but it was unique. The idea behind Quibi wasn’t flawed. Maybe, it was the wrong timing. Let’s have a look at Quibi’s timeline:


2018: Quibi was founded in August 2018 by Jeffrey Katzenberg and was led by Meg Whitman, its CEO. Raised US$ 1B from major Hollywood film studios, TV companies, telecommunications companies, technology companies, banks, and other investors.

2019: Announcement of its launch in April 2020 with two pricing tiers. Sold out its first-year advertising inventory, which amounted to US$150 million.

2020: Announcement of partnership with Canadian telecommunications company BCE in March 2020. Filed a lawsuit against interactive video developer Eko seeking a declaration that Quibi did not infringe on Eko’s patented technology.

·       April 2020: Launched in the US and Canada. Ad-free U.S. version of the app was made available in the UK, Ireland, Australia, and Germany. Quibi ranked No. 11 for being the most downloaded app as of April 16 in Google Play Store.

·       May 2020: Feature added to allow shows to be cast from phones onto TVs through AirPlay and Chromecast. Elliott Management announced that it would fund Eko’s lawsuit in exchange for equity in the company. 

·       June 2020: Implemented voluntary executive pay cuts. App had fallen out of the top 1,000 apps on Sensor Tower’s rankings. Raised an additional US$750 million in funding from Jan-mid June.

·       September 2020: Its series, #FreeRayshawn, won two Emmy Awards. A free, ad-supported version of the service was released in Australia and New Zealand, and the price of the ad-free version was reduced.

·       October 2020: Announcement of Quibi’s shut down on December 1, 2020, after falling well short of its subscriber projections.

On October 21, 2020, just six months after Quibi’s launch, The Wall Street Journal reported that it was shutting down. Jeffery Katzenberg said, “There was no question that keeping us going was not going to have a different outcome; it was just going to spend a whole lot more money without any value to show for it. So, out of respect for these people that put up this extraordinary amount of capital to do it, that’s irresponsible, and we both felt we shouldn’t do it.”

Quibi’s Investors

In 2018, Quibi raised US$ 1 billion in funding from major Hollywood film studios, TV companies, telecommunications companies, technology companies, banks, and other investors, including The Walt Disney Company, 21st Century Fox, NBCUniversal, Sony Pictures, Time Warner, Viacom, eOne, Lionsgate, MGM, Madrone Capital, Goldman Sachs, JPMorgan Chase, Alibaba Group, Liberty Global and ITV.

Idea Behind Quibi

Quibi’s bet on exclusively mobile, short-form video was premised on the idea that people could watch these shows while out and about, i.e. while commuting, or waiting for someone.

It launched during the pandemic, but it would still be a risky bet even in normal times. On April 6, it rolled out a mobile-only concept just a couple of weeks after the pandemic locked down the whole world in their homes. People could still watch Quibi at home on their phones, but that wasn’t really the idea behind it.

Yet, Quibi believed that unconventional strategy, a very expensive, star-packed programming released in 10-minute-or-less episodes, would become a hit. The clips were available in its app for US$ 5 per month for Quibi’s cheapest tier and US$ 8 per month for an ad-free version. 

Some of the top paid stars of Hollywood worked with Quibi including, Chrissy Teigen, Lebron James, Dwayne Johnson, Reese Witherspoon, Chance the Rapper, Kevin Hart, Jennifer Lopez, Idris Elba, Zac Efron, Tina Fey, Liam Hemsworth and husband-and-wife combo Joe Jonas and Sophie Turner and many others.

Challenges Faced

Soon after launching, Quibi’s users complained about not being able to watch its shows on the biggest screen in the house, as there was no support to watch Quibi’s programming on televisions. It also launched without any way to share its shows on social media, stunting virality and word of mouth.

And Quibi wasn’t the only one in the field of entertainment. As it ramped up in the middle of a wave of new streaming services, it was competing for subscription money against some of the top established companies like Disney Plus, Apple TV Plus, Peacock and HBO Max and Netflix. Along with this huge competition to tackle, the pandemic made people lose their jobs, forcing them to re-evaluate how many subscriptions to pay for. Instead of paying US$ 5 per month on Quibi, people could watch free short videos on Youtube.

Quibi CEO Meg Whitman had said before the launch that Quibi was willing to change if need be, and as it struggled to sign up people at the pace it had forecasted, it had to change!

What were the changes made?

·   The major change was widening its device support beyond mobile. The company added support for Apple’s AirPlay in May to stream its programming on some TV screens and updated its Android and iOS apps to support Chromecast and Chromecast-integrated TVs in June.

·   In October, it added support for TV-streaming devices, releasing apps for Amazon Fire TV, Apple TV and Android TV. 

·   Quibi also added the ability to screenshot its shows in July, allowing viewers to easily share and meme its programming. 

What went wrong

Jeffrey Katzenberg believed that the COVID-19 effect on people’s viewing habits would be neutral to Quibi. But he later put the blame on the pandemic for whatever went wrong with the platform. According to the founders, there are most likely two reasons for Quibi’s failure:

·       The idea itself wasn’t strong enough to justify a standalone streaming service.

·       The timing was bad.

Quibi’s founder Katzenberg had said in an interview,” The unfortunate timing of the launch during the pandemic is a big contributing factor.” But that is not the only reason. Some of the other reasons that led to Quibi’s shut down are:

·   Misjudging which programming and technology features would appeal to young customers.

·   Waiting too long to make the service available on televisions and not just phones.

·   Huge spending on advertising that left little money left when the company was struggling to stay afloat.

On October 21, 2020, six months after its launch, Katzenberg announced that the platform would shut down by around December 1, 2020, after falling well short of its subscriber projections. The company had about US$350 million of capital that it could return to investors and said that it would try to shop around its assets to generate more.

Takeaways from Quibi’s Failure

Quibi had a brand-new product, but its content failed to generate enough buzz, it was unable to grow its subscriber base, the streaming landscape was extremely competitive, and the Covid-19 pandemic turned out to be the icing on the cake. Even though Quibi made efforts to change its basic idea and adapt to the circumstances, it wasn’t enough.

The fact that the company believed that people would pay for it before they actually understood what it was, was a loophole in their business model. People take time to adapt to new things. And every business shouldn’t believe that there would be easier adoption of their product, especially when there are many more similar products out there. The main thing that keeps a company going is the support of customers and understanding what they want. Only then can any business flourish. 

Read Part 1 of the series here

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Komal writes about the startup ecosystem on VCBay. She is an Economics Hons. graduate from Miranda House, Delhi University, and is passionate about the world of entrepreneurship and finance.


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