Quibi was meant to revolutionize the streaming industry. It had everything going for it.
Seasoned tech executives — Check
Big-name Investors — Check
A $2 billion-dollar war chest— Check
And yet 6 months after launch, Quibi is all set to shut down. So what went wrong?
Quibi was meant to be a mobile only-app that promised original programming — with episodes lasting anywhere between 7–10 mins. Quick Bites aka Quibi, Get it? And they planned to make money by charging users a monthly subscription fee– $5 (ad-supported) and $8 (ad-free).
And while the scheme did look promising at first, you have to remember original programming is risky.
For instance, if you are creating content exclusively for a new age streaming platform, it can get quite expensive. Actors, producers, elaborate sets, music and all the other things that go alongside producing a potential blockbuster show. The costs can add up rather quickly. Now some might contest licensing content from other producers can also be equally pricey. In fact, you could argue that it’s actually more expensive than commissioning original content. But here’s the thing — You almost always license content that has a proven track record. Shows like “Friends” and “The Office”.
And that means you have two benefits.
1) You don’t have to worry about flops. After all, you know the show has a loyal following. So licensing stuff is always a better alternative on this front.
2) You also don’t have to worry about marketing costs when you work with well-established shows.
Look at Netflix for example. They know for a fact that original content is more cost-effective than licensing existing content. But as the company began to ramp up its investments in producing new shows, their marketing costs shot up in tandem. After all, you have to tell people why they should be watching these programs. And Quibi had to deal with these predicaments as well.
So they did the only thing they could. In a bid to increase the likelihood of success, they roped in big names — Will Smith, Jennifer Lopez, Reese Witherspoon and Oscar-winning director Steven Spielberg. They also spent big money on promoting these shows. And Quibi by all accounts had made its bed even before it launched its service to the general public. Anything barring an extraordinary reception would now be deemed a failure considering the investment.
And then, bang in the middle of a pandemic, Quibi launched the platform in April. User reviews started coming in thick and fast. Some said it was okay. Even others called it terrible. But a vast majority couldn’t really figure why you needed 10 min shows that you could only stream on mobile. It seemed weird.
See, Quibi was founded on the idea that people were desperately seeking to watch bite-sized content on their phones. Not just any content, but quality Hollywood material. They based this hypothesis off of the success TikTok and its ilk found amongst millennial and Gen-Z audience. But unlike user-generated content, every second of programming streamed on Quibi cost the company hundreds and thousands of dollars. So they had no margin for error. And considering they launched the platform in April this year, the timing couldn’t have been worse. People were working from home already and they had no trouble watching their favourite shows on big television screens. So this whole value proposition stating Quibi was designed to be consumed on-the-go whilst navigating your day-to-day lives, didn’t hold anymore. And so after 6 months of operations, Quibi’s founders decided that it was best to shut shop.
Now look, we are not going to castigate the founders and investors for not seeing the writing on the wall. After all, as Daniel Kahneman, the prominent economist notes— “Actions that seemed prudent in foresight can look irresponsibly negligent in hindsight… When the outcomes are bad, clients often blame their advisors for not seeing the handwriting on the wall — forgetting that it was written in invisible ink that became legible only afterwards.”
It’s like Twitter. Imagine somebody pitched the idea to you back in 2006 — “A micro-blogging platform where you could instantly post short messages of 140 characters or less” You’d have quickly turned around and asked — “Why would you put a character limit on blogging? What’s the logic in that?”
But Twitter did eventually prove that it was a pretty compelling value proposition. And maybe the founders at Quibi also believed they had a strong value proposition to go to market. Unfortunately, they gambled big money in putting this hypothesis to the test and it didn’t work out.
A terrible travesty. But something we could all learn from, eh?
Until next time…
Also don't forget to check our daily brief. In today's issue we talk about Amazon's problem with the Future Group Acquisition and the state of online education in India. Do read the full draft here.