22 Oct 2020
Posted in Technology
COVID-19 did not kill Quibi, but incompetence and overconfidence did
Following today’s news that Quibi is ceasing operations, here is some further commentary from GlobalData’s Thematic Research team:
After just six months in operation, Quibi has announced that it is shutting down. Its executives have laid the blame at the door of COVID-19, but that is an obvious excuse. The company failed because of a limited product offering and naïve business model, says GlobalData, a leading data and analytics company.
Danyaal Rashid, Associate Analyst for Thematic Research at GlobalData, comments: “From the outset, Quibi was overconfident about its product, showing little concern for consumer preferences. Short-form video is extremely popular, as demonstrated by the success of TikTok, and consumers are willing to pay for premium content, as shown by the continuing popularity of services such as Netflix and Disney+. However, marrying these two themes together did not make commercial sense.
“People prefer to immerse themselves in premium content, not watch it on the fly, broken down into unsatisfying 10-minute segments. Quibi also blundered by forcing users to watch on their mobile devices, with no desktop or TV app option. For a product that charges $7.99 a month, that is a ridiculous proposition, when full access to Disney+, across all devices, comes in at just $6.99 a month.”
Founder Jeffrey Katzenberg and CEO Meg Whitman attempted to persuade viewers that Quibi was the future, buoyed by the $1.8bn of private capital they raised before the product was even announced. Features such as Turnstyle, which allowed for rapid switching between landscape and portrait orientations depending on how the user held their phone, attempted to fix problems that consumers did not realize they had. These features were also not enough to justify the high price, which was implemented to balance the vast amount that the firm was spending on content. Reports suggest that content spending added up to $100,000 a minute, on par with Hollywood’s finest.
Rashid adds: “Quibi forgot that, with a subscription model, it is typically necessary to forgo short-term revenue to build up a solid and loyal subscriber base. This might involve offering cheap initial subscriptions that undercut the competition.
“Quibi’s high-profile failure should be a lesson to all future streamers that, in the end, consumers will always choose substance over style.”