The streaming service Quibi is shutting down only six months after launching, according to people familiar with the matter, bringing an end to Jeffrey Katzenberg’s $1.8bn bet on short-form video.
Developed by the Disney veteran and Meg Whitman, former chief executive of Hewlett-Packard, Quibi had managed to raise billions from the biggest names in Hollywood with the idea of selling “quick-bites” of slickly produced entertainment to millennials on the go.
But the well-funded start-up quickly devolved into an expensive failure in the industry-wide streaming battle, as the largest groups in Hollywood and Silicon Valley compete against Netflix for the future of entertainment.
Quibi had raised capital from investors including Alibaba, Disney, Viacom, all the big Hollywood studios, Liberty Global, Goldman Sachs, JPMorgan and the Walton family, the founders of Walmart.
It spent hundreds of millions of dollars to enlist top-tier directors such as Steven Spielberg, as well as celebrities like LeBron James and Chrissy Teigen, to make shows for its app, promising “movie-quality” scripted shows and documentaries, daily news and sports. The service was free for 90 days, before charging $8 a month, or $5 a month with advertisements.
Investors had hoped Quibi could secure about 20m subscribers over five years and generate $2bn in revenue, with around a third coming from advertising.
However, by the time Quibi debuted in April, the coronavirus had put an end to the commutes and coffee shop lines that its “quick bite” content was designed for. In May, Mr Katzenberg, founder of DreamWorks, said: “I attribute everything that has gone wrong to coronavirus.”
The company struggled to convince people to pay for the app. Mr Katzenberg in recent weeks sounded out potential buyers, but was unable to strike a deal, according to people familiar with the matter.
Quibi had faced considerable scepticism before its arrival. Analysts questioned how Mr Katzenberg and Ms Whitman, aged 69 and 64 respectively, could run a trailblazing short-form mobile video start-up for young people, or whether people would pay for it amid a sea of streaming subscriptions.
But many in Hollywood had been wary of betting against Mr Katzenberg, who had built a reputation for his tenacity and success at Disney and DreamWorks. “Nobody can say no to Jeffrey,” said one Quibi investor. “He does not allow you to say no”.