Workers at short-form video service Quibi are scheduling farewell drinks with colleagues after signs within the company point to its impending closure, according to a report.
On Tuesday, Silicon Valley business publication The Information said workers were informally scheduling their goodbye parties after important strategy meetings within the company were abruptly cancelled.
Launched in April, Quibi sought to bring something new to the streaming media industry: Short-form videos intended for consumption on-the-go via smartphones and tablets. In the months leading up to the launch, Quibi enlisted big-name brands like NBC News and the news magazine 60 Minutes to produce content for the service.
Those deals helped media industry veteran and Quibi founder Jeffrey Katzenberg and the company’s chief executive Meg Whitman sign on brands like PepsiCo, Anheuser-Busch and Procter & Gamble who were willing to purchase ad inventory from the streaming service sight unseen. It also helped the duo raise hundreds of millions of dollars from investors like tech firms Alibaba and Google.
Before Quibi debuted, it offered prospective users a generous three-month free trial. That combined with a partnership through wireless phone company T-Mobile drew hundreds of thousands of viewers to the service when it finally rolled out in April.
Many thought Quibi’s big-name brands, deep-pocket investors and focus on mobile platforms were a winning combination — none moreso than Katzenberg and Whitman. But a combination of things led Quibi to the precarious situation it finds itself in now, including a global health pandemic brought on by the novel coronavirus COVID-19 that kept people at home for months.
Those people put away their phones and tablets in favor of their TV sets — and Quibi offered no way to stream content from the biggest screen in the house. (Quibi eventually offered a way to “sling” content via Apple’s Airplay and Google’s Chromecast; on Tuesday, the company finally announced native apps for Apple TV, Android TV and Amazon Fire TV device users.)
Users who did give Quibi a chance didn’t stick around for long – Quibi offered a wealth of content, but despite a handful of Emmy nods, nothing kept viewers engaged. A report by Sensor Tower published three months after Quibi launch estimated 9 out of 10 people who signed up for a free trial of Quibi canceled when it came time to pay their first bill. (Others complained on social media when they forgot to cancel and were subsequently charged — Quibi costs $5 a month with ads or $8 a month without.)
Sensor Tower estimated Quibi ended their three-month post-launch period with 72,000 paying subscribers — far less than the 7 million the company was hoping for. An analyst said the service could have as many as 360,000 paid users by the time all of the three-month free trials converted into paid subscriptions.
Shortly after the report, a Quibi spokesperson downplayed the numbers, noting the service’s mobile apps had been downloaded more 5 million times. “We are seeing excellent conversions to paid subscribers,” the spokesperson said.
But it apparently wasn’t enough to keep the company out of dire straits: Last month, the Wall Street Journal reported the company was exploring various strategic options to keep itself afloat, including an outright sale, as its cash reserves started to dwindle.
Recently, Katzenberg and other executives approached their counterparters at Apple, Facebook and AT&T’s WarnerMedia about purchasing the company, according to The Information. When that didn’t work, Quibi executives went to other companies — including Comcast’s NBC Universal and Facebook — to see if they’d be interested in acquiring the streaming service’s content library. Those companies turned down the opportunity, The Information reported.
If the company shuts down, it would be one of the media industry’s most-expensive failures — right alongside AOL’s decision to acquire Time Warner for $350 billion in 2000 (AOL and Time Warner, now WarnerMedia, are currently owned by rival phone companies) and AT&T’s decision to plunk down $49 billion for DirecTV.