Why the $ 1.75 billion streaming app failed

The short-form mobile video app, Quib, raised $ 1.75 billion in venture funding before launching in April. Six months later, it is closing.

In an open letter to employees and investors posted at the Medium on Wednesday evening, cofounders Jeffrey Katzenberg (former DreamWorks Animation CEO) and Meg Whitman (former HP CEO) wrote, “It is with an incredibly heavy mind that we announce today We are doing that we want to close the business and sell our content and technology assets. Qubi was a big idea and there was no one who wanted to achieve more success than this. Our failure to make up for the lack of effort Was not; we have 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 an attractive distribution partnership with T-Mobile. It starred big talents such as Chrissy Teigen, Jennifer Lopez, Reese Witherspoon, Liam Hemsworth, Tyra Banks, Joe Jonas, Chance the Rapper, Demi Lovato and Andy Samberg.

So, why did Quoby fail so brilliantly?

Mike Cyvert, President and COO at T-Mobile, and Quib CEO Meg Whitman spoke about the partnership between Quaby and T-Mobile during a KB keynote speech at CES on January 8, 2020 in Las Vegas, Nevada, US Of. Steve marcus

Launched during the epidemic

Quabby (short for “quick bite”) was the original show with episodes shorter than 10 minutes that people could watch on their phones. The company’s television ad before the launch put that pitch into a comic context: a stampede car driver watching a QB video while his friends rob the bank; When he drowns, a man traps Quibidi to watch the video.

But during the COVID-19 epidemic, the app was launched on 6 April at the height of US lockdown. During the lockdown, people were not traveling, riding public transport, or waiting for friends to arrive, or in any other scenario in which, before the epidemic, people entertained with their phones for 10 minutes Wanted Instead, people were at home, watching the show on fullscreen TV. He was watching hour-long shows like “Tiger King” on Netflix.

Quibby also did not launch with an option to watch on its TV.

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 data from SensorTower, Quabby had 72,000 paying customers in July, suggesting an 8% conversion rate from the 90-day free trial.

In an interview with the New York Times in May, Katzenberg blamed the beginning of Quibby’s lack of attention on the epidemic: “I attribute everything that has gone wrong to coronaviruses. Everything.”

Crowded Streaming Market

But Katzenberg and Whitman cannot entirely blame the epidemic. This would suggest that if Qubi had been launched before the epidemic, it would have been a hit.

The streaming space is extremely congested, and became even more crowded around the time Quibi came out of the opening gate. Disney launched Disney + in November and was a huge success, attracting 60.5 million paying customers in its first nine months. NBCUniversal Soft launched Mayur for Comcast customers in April, then launched it nationally in July; It reportedly had 15 million subscribers as of September. HBO launched HBO Max in May, and wooed 4.1 million paying customers by July.

These services have deep-pocketed media groups that support them and come with large-scale content libraries at launch. Quibi had no shortage of funds, but perhaps the show lineup was not simply enticing people.

Or its whole premise of short-form television was faulty, and when it launched there was no talk.

It is likely that Katzenberg and Whitman finally accept, now at the end of the road, in a goodbye letter: “Quoby is not succeeding. Probably for one of two reasons, because the idea was not so strong as a standalone streaming. Could justify because of service or our time. Unfortunately, we will never know, but we doubt it is a combination of the two. “

Big expense

Quabby had $ 1.75 billion to pursue content and marketing, but could still oversee individual projects or talent. The application suffered backlash soon after launching for about five minutes, it paid some stars, including $ 6 million for Reece Witherspoon to narrate a nature program; Wierspoon’s husband, former CAA agent Jim Toth, was head of the content acquisition and talent quib.

By June, exactly two months after the launch, Pandemic was telling its top executives to take a 10% pay cut amid the epidemic.

Patent lawsuit

If all of its stumbles were not causing enough damage, Quibe also became a hit with a patent lawsuit from video startup Echo, bankrolled by hedge fund Elliott Management, on one of Quebee’s most acclaimed features: the video’s orientation Automatic re-formatting of video on Aadhaar viewer’s phone.

Eko said that Quib stole the technique. In July, a US district judge dismissed three of Echo’s nine claims, including one that Katzenberg “contracted” with Echo, but allowed the patent infringement lawsuit to proceed.

what next?

According to The Information, Quabby has $ 350 million left to return to shareholders. This means it raised $ 1.4 billion in six months. Katzenberg reportedly made a Quibi takeover purchase for NBCUniversal and Facebook, but the two passed away.

Nevertheless, its shows or other IPs may sell to big streaming giants. So let’s say you won’t be watching “Chrissy Court” on Netflix anytime soon.

Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers the streaming wars. Follow her on Twitter @readDanwrite.

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