Execution, Not Content, Led to Quibi's Abrupt Market Exit, Say Analysts

Quibi, the short-form video service founded by Jeffrey Katzenberg in 2018 and headed by former HP CEO Meg Whitman, was a “bad idea -- that inexplicably -- managed to raise $1.75 billion” in funding, Brightcove analyst Jim O’Neill emailed Thursday, reacting to the service's shutdown after only six months. In a joint letter to employees, investors and partners Wednesday, Katzenberg and Whitman said they're “winding down the business” and seeking buyers for Quibi’s content and technology assets. They said the goal of Quibi, originally called NewTV, was to create a new category of content -- short-form entertainment for mobile devices -- but circumstances weren’t right for Quibi to succeed “as a standalone company.” They cited two possible reasons: “because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing” during a pandemic. But, they said: “Other businesses have faced these unprecedented challenges and have found their way through it. We were not able to do so.” Though Quibi was a good outlet for experimenting with content creation, O’Neill said management “totally misread the market,” ignoring data about how consumers view content and jumping into the space “without adequate research.” In a January prediction, O’Neill wondered how the service would justify the subscription price and questioned how it would engage consumers long term. Quibi management falsely assumed because “Gen Edge and Millennial viewers consume a lot of YouTube content that they’d do the same” with what the service considered premium content, “assuming users want short-form content,” O’Neill said Thursday. Millennials are actually the most avid moviegoers, said the analyst. “They want to binge,” he said, “and they don’t always go to their phones to watch.” Amid a crowded video streaming market, O’Neill downplayed competition for eyeballs as the reason for Quibi’s demise. Parks Associates analyst Steve Nason wasn’t shocked Quibi closed shop but was surprised it happened after only six months. He cited contributing factors including “outsized expectations” and a patent infringement lawsuit brought by Eko. As recently as this week, Quibi had mixed messages, Nason said. It announced Monday it planned to take the service to connected TVs to widen its base: “That should have been done at launch,” said the analyst. “It was very shortsighted.” The Quibi failure stands out from other services that were doomed because their content didn’t connect with users. That wasn’t the case with Quibi, which nabbed 10 Emmy nominations. “Content wasn’t the issue,” Nason said.