Quibi has spent more than $1 billion so far gearing up for what founder Jeffrey Katzenberg touts as a category-defining pay-TV service of the future, uniquely built for smartphones. It’s not clear when, or even whether, the startup will recoup that.
In the months leading up to Quibi’s still-planned April 6 debut, industry insiders privately expressed skepticism about the untested business model, typically followed by a caveat: But you can’t bet against Katzenberg. That was before the coronavirus pandemic threw millions of Americans out of work and left most of the country cooped up at home. “Quibi always faced headwinds — but now they’re blowing at gale force,” says industry consultant Will Richmond, publisher of VideoNuze. “It’s very challenging to see how this is going to play out well for them.”
Katzenberg believes Quibi has banked high-value content that will find a receptive and ultimately paying audience. “My confidence that people will find this engaging and appealing has never been higher,” Katzenberg, working from his Beverly Hills mansion, tells Variety via phone.
Quibi execs deliberated whether to postpone the April launch, according to Katzenberg. They decided to stick with the date, but in hopes of establishing a loyal user base, the service will be free for 90 days for anyone who cares to check it out. And, as virtually all Hollywood productions have shut down due to the virus outbreak, Katzenberg says Quibi’s partners have shot enough original material to give it fresh content through Halloween 2020. In fact, he claims, the company has upped its release schedule to around 9,600 episodes (up from 8,500) in the first year, after Quibi scrambled to get shows into production in anticipation of a possible writers’ strike.
Katzenberg may be bullish about his baby. But skeptics see Quibi as trying to compete on two different fronts and coming up short on both.
Versus premium streamers like Netflix, Hulu, Prime Video, Disney Plus and soon HBO Max and Peacock, Quibi is deliberately avoiding delivering programming to the living room. The Quibi “quick bites,” though high in production quality, are not designed to be watched on TV, where most traditional subscription VOD is watched; at the same time, of course, Netflix and everyone else also have mobile apps. With the mobile-only, bite-size-episode play, Quibi will be fighting to win attention against the steady gusher of free — and hugely popular — short-form content on Instagram, YouTube, Snapchat and TikTok.
“Young people don’t define ‘quality’ in terms of high production values,” says Mike Bloxham, senior VP of global media and entertainment at Magid. For the smartphone-first crowd Quibi is targeting, “quality is defined as ‘what moves me,’ not how much you spent on making the content.”
Some say Quibi’s big-budget content strategy, led by former movie mogul Katzenberg (who is 69) and Quibi CEO Meg Whitman (63), represents a generational mismatch. Rivals like Toronto-based Snibble, an ad-supported short-form video startup, argue that Quibi misses the mark. “Unlike Quibi, Snibble has been designed for the 16- to 24-year-olds who actually use mobile for entertainment — not for the 45- to 65-year-olds who just want to make money from it,” claims chief customer officer Neale Halliday.
In response to such critics, Katzenberg counters that the average age of Quibi’s staff is 30, and members are steeped in Gen Z and millennial culture. The company’s internal research, he maintains, shows that if Quibi users watch just two to four episodes per day (less than half an hour) multiple days per week, they’ll happily pay $5-$8 monthly for the service. “I am an enormous fan of social media content, but what we’ve tried to do is bring a different kind of storytelling and technology into a premium offering,” he says.
Quibi is presenting exclusive, scripted dramas and comedies and reality-TV-style content from a parade of A-listers like Reese Witherspoon, Steven Spielberg, Jennifer Lopez, Sam Raimi and Antoine Fuqua, with everything chunked into pieces of less than 10 minutes. However, while the star talent is recognizable, virtually none of the content is (except for reboots of “Punk’d” and “Reno 911!”). The decision defies historical precedent. “Every service going back to HBO in the 1970s got started by licensing content that was known to consumers,” Richmond says.
On another front, Quibi also faces a legal headache: It’s been sued by interactive-video company Eko, which claims Katzenberg’s company blatantly copied its patented mobile-video technology and stole trade secrets. (Quibi says Eko’s claims “have absolutely no merit.”) The legal action doesn’t threaten to postpone Quibi’s launch next week because Eko is not seeking a temporary restraining order, which requires defendants to immediately suspend their accused activity.
Meanwhile, Quibi is hoping to get a lift from its bundling deal with T-Mobile, which has a similar pact with Netflix to make it free to unlimited-plan customers with multiple lines. In another revenue stream, the startup is counting on $150 million in one-year advertising commitments from brands including Google, P&G and PepsiCo.
The coronavirus forced Quibi to cancel its red-carpet premiere event. But Katzenberg insists the company will make noise through promotion by 250 celebs and influencers attached to Quibi shows, including Chrissy Teigen, Joe Jonas and LeBron James.
Niecy Nash, who stars in Quibi’s reboot of Comedy Central cult fave “Reno 911!,” is optimistic that the short-form format will take root. “It’s just enough time for people to get on their phones, take a look and see what’s going on, and hop back off,” she says. “Expect fun and funny.”
There’s no doubt people will check out Quibi, particularly with stay-at-home directives set to run through the end of April. “America right now is a captive audience starved for something to do,” says Parks Associates analyst Steve Nason.
The question is whether a year from now the company will be generating enough incoming subscriber dollars to offset the high-end-content cost model — and if not, whether Quibi will be able to pivot.
Marc Malkin contributed to this article.