OCTOBER 22, 2020
Quibi’s co-founders Jeffrey Katzenberg and Meg Whitman said the company spectacularly failed just six months after its launch because they “asked people to pay for it before they understood that it was” in an interview with CNBC on Thursday.
The admission comes after Quibi – which billed itself as presenting “fresh content from today’s biggest stars, one quick bite at a time” – announced it was shutting down on Wednesday afternoon, with its demise coming just six months after it launched amid high expectations earlier this year.
“We had a new product. We asked people to pay for it before they actually understood what it was. I think we thought there would be easier adoption by people to it,” Katzenberg told the financial network.
Katzenberg, best known for co-founding DreamWorks, believed by recruiting A-list talent to record Hollywood-produced short form videos would justify the monthly cost of $4.99 with ads and $7.99 without ads.
It raised a whopping $1.75 billion in funding between 2018 and 2020 before launching.
But the company struggled to maintain a foothold in an increasingly crowded mobile video space and chaotic news cycles.
According to a New York Times report in May, Quibi fell out of the top 50 most downloaded free iPhone apps, with only 1.3 million active users, well short of expectations.
“It was clear that for whatever reason this was not going to be as successful as Jeffrey and I hoped,” Whitman told CNBC. “The honorable thing to do is return money to shareholders when we knew this was not going to have a path forward as a viable, stand alone business.”
A-listers Katzenberg was able to sign for Quibi included Reese Witherspoon, Jennifer Lopez, Chrissy Teigen, Liam Hemsworth, Chance the Rapper and Nicole Richie.
But noncelebrity amateur content through free apps including the extremely popular TikTok, YouTube and Twitter proved to be too much to overcome.
Quibi’s backers included megabanks Goldman Sachs, JPMorgan Chase, tech giant Google, Chinese tech company Alibaba and billionaire Carlos Slim.