The bad news for Quibi continues, as the struggling Jeffrey Katzenberg-founded video startup is in danger of massively missing its first-year target for paying subscribers based on slowing app-download figures, according to a Wall Street Journal report.
An unflattering piece published Sunday by the Wall Street Journal detailed infighting between Katzenberg and CEO Meg Whitman and reported that Quibi is currently on track to miss its subscriber goal for year one by more than 5 million.
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Citing an anonymous source, the Journal reported that at Quibi’s current pace, it will sign up fewer than 2 million paying subscribers by April 2020 based on its current signup trajectory. The company had projected 7.4 million subscribers after one year.
App downloads of Quibi have slowed considerably since the April 6 launch. Quibi’s drop-off is all the more concerning because users aren’t even paying for the service yet: It debuted with a 90-day-free offer, meaning that starting in early July users will need to fork over actual money to access Quibi ($4.99 monthly with ads; $7.99 per month without ads).
From April 6 to May 28, the Quibi app had been downloaded about 4 million times, per analytics firm Apptopia. Of those, just 30% are daily active users. The most popular show on Quibi, per Apptopia’s analysis, is “Reno 911!”, a revival of the Comedy Central cult-favorite comedy.
Katzenberg has blamed Quibi’s disappointing results on the COVID-19 outbreak (“I attribute everything that has gone wrong to coronavirus. Everything,” he said in a New York Times interview). More recently, the company said the slowing number of app downloads also is partly the result of “its decision to reduce its marketing in light of protests sweeping across the U.S. following the killing of George Floyd,” according to the Journal report.
One key problem for Quibi was that it launched without providing the ability to watch its content on TVs — a critical missing piece, especially during stay-at-home quarantines. The company scrambled to add support for Apple’s AirPlay (which it did the week of May 25) and Google’s Chromecast (on June 9). But those moves might be too little, too late.
Other signs of distress at Quibi: Megan Imbres, head of brand and content marketing, exited the company just two weeks after launch; advertisers have reportedly sought to dial down their spending commitments because of low viewership; and Quibi earlier this month said top execs, including Whitman, were taking a 10% salary cut.
Meanwhile, Quibi is being sued by interactive-video startup Eko, which alleges Quibi’s Turnstyle feature infringes a key patent and that Katzenberg’s company stole trade secrets. Activist hedge fund Elliott Management made an investment in Eko to fund the litigation against Quibi.
L.A.-based Quibi has raised about $1.75 billion in funding from investors including Disney, WarnerMedia, Sony, NBCUniversal and ViacomCBS. But with its cash burn rate — and lower-than-expected revenue — Quibi expects to need an additional $200 million by the second half of 2021, per the Journal report, although it’s uncertain whether the startup’s backers will be willing to re-up their commitment.
Katzenberg originally founded the company as “NewTV.” (Per the WSJ, the ex-movie mogul wanted to call the service “Omakase,” referring to a chef-selected sushi restaurant order, but Whitman pushed back.) In announcing the venture’s initial $1 billion funding in August 2018, he touted the company’s massive potential as a mobile-only subscription video service, telling Variety, “We don’t consider this competitive with Hulu, or HBO, or Netflix, or the networks. It’s a completely different use case.”
Quibi (a portmanteau of “quick bites”) has licensed original scripted and unscripted shows, broken into episodes of less than 10 minutes for on-the-go viewing, from a long list of top Hollywood talent. That includes content featuring Jennifer Lopez, Chance the Rapper, Chrissy Teigen, Liam Hemsworth, Sophie Turner, Lena Waithe and Reese Witherspoon and projects from directors including Steven Spielberg, Guillermo del Toro, Antoine Fuqua, Sam Raimi, Catherine Hardwicke and Peter Farrelly.
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