One month ahead of commercial launch, Quibi said it closed $750 million in second-round funding, which the premium mobile-subscription player has said believes will take it to the point of profitability. Led by founder Jeffrey Katzenberg and CEO Meg Whitman, the company has now banked $1.75 billion to date.
Earlier this year, Quibi said it had raised $500 million in follow-on funding but since then the round was upsized to $750 million. The company didn’t disclose names of investors in the latest round, but said it included investments by new and existing investors including “studios, major technology companies, strategic partners and financial investors.”
“We concluded a very successful second raise which will provide Quibi with a strong cash runway,” CFO Ambereen Toubassy said in a statement provided to Variety. “This round of $750 million gives us tremendous flexibility and the financial wherewithal to build content and technology that consumers embrace.”
In 2018, the startup (then called “New TV”) announced that it had raised $1 billion in funding. Among the initial investors were a who’s who of Hollywood studios: Disney, NBCUniversal, Sony Pictures Entertainment, Viacom, AT&T’s WarnerMedia, Lionsgate, MGM, ITV and Entertainment One (now part of Hasbro). Tech investors include China’s Alibaba Group. That funding round was led by VC firm Madrone Capital Partners; other investors were Goldman Sachs, JPMorgan and John Malone’s Liberty Global. The Katzenberg-founded WndrCo investment vehicle also is a Quibi investor.
“We found significant interest from long-term investors in the financial, distribution and content arenas who were excited to participate in this round,” Whitman said in a statement. She also said Quibi’s content, app design and user interface are “resonating with early users.”
Whitman told Variety in an interview last year that she expected the additional funding Quibi was looking to raise (it was targeting $500 million at the time) would take the company to break-even.
The company has been writing big checks to secure original content leading up to its planned April 6 debut: Quibi says it’s spending up to $6 million per hour of programming, licensed from Hollywood A-listers like Steven Spielberg, Antoine Fuqua, Reese Witherspoon and Guillermo del Toro for the short-form video service.
At launch, Quibi will have about 50 original short-form titles. The service, aimed at consumers 18-34, will be priced at $4.99 monthly for the service with ads and $7.99 per month without ads. In the first year, Quibi plans to launch some 175 original series and 8,500 episodes, with plans to deliver three hours of new content daily.
The content ordered by Quibi (short for “quick bites”) is all created for mobile viewing, with episodes of less than 10 minutes. There are three types of content on the service: movies, which are broken into “chapters”; unscripted short-form series; and Daily Essentials, covering news, sports, weather and talk shows.
Quibi is spending up to $100,000 per minute on production budgets for originals. On top of that, it’s paying a 20% profit margin to creators and studios, according to Whitman. Quibi doesn’t own any of the content: The company is licensing it for seven years, after which rights revert to the content owners. After two years on Quibi, creator partners have rights to “reassemble” the episodes into a single movie for distribution in another window.
The company also is paying big bucks on a pre-launch marketing blitz, which included a 30-second Super Bowl spot.
Industry observers remain skeptical that Quibi can break through the streaming-video noise and land paying subscribers for its untested, mobile-only model. Whitman, speaking at a conference in January, said she doesn’t see the likes of Netflix, Hulu or Disney Plus as head-to-head rivals. The presumed use case for Quibi is on-the-go viewing between 7 a.m. and 7 p.m. on smartphones, not during primetime hours in the living room, she said. In that case, Quibi will need to contend for time and attention against the likes of social media, email and other apps people already spend hours using each day.
Quibi announced last year that it sold out its first-year ad inventory with $150 million in commitments from advertisers including Google, P&G and PepsiCo. The company also inked a distribution deal with T-Mobile, which has yet to reveal how it will promote Quibi’s launch.
(Pictured above: Quibi CEO Meg Whitman at the company’s CES 2020 press conference in Las Vegas in January)