UPDATED: Quibi, the struggling short-form mobile video startup led by founder Jeffrey Katzenberg and CEO Meg Whitman, is shutting down just six months post-launch after the company failed to find a buyer, according to a new report.
[Later Wednesday. Quibi confirmed the plan to wind down operations and seek to sell its assets.]
According to a Wall Street Journal report, Katzenberg called investors Wednesday to tell them Quibi was folding. That came after a restructuring firm hired by Quibi — which raised $1.75 billion in funding, including from major media companies including Disney, NBCUniversal, and WarnerMedia — provided a list of options to the company’s board of directors this week. One of the proposals: for Quibi to cut its losses and shutter the company.
Sources told Variety that Quibi, which has about 200 employees, has set an all-hands internal meeting for 6 p.m. ET today. Katzenberg, according to a report Tuesday by The Information, had “told people in the industry that he may have to shut down the company.”
Quibi reps did not respond to multiple requests for comment.
Last month, the Wall Street Journal reported that Katzenberg was exploring “strategic options” for Quibi, including a potential sale. Katzenberg pitched a sale of the company — which has about 500,000 paying customers — to Apple, WarnerMedia and Facebook but was rebuffed, The Information reported earlier this month. Katzenberg also struck out in his attempt to sell Quibi’s programming rights to companies including NBCUniversal and Facebook, per The Information’s story this week. NBCU was “put off by the fact that Quibi doesn’t own many of the shows it puts on its platform,” according to today’s Journal article.
Actually, Quibi doesn’t own any of the big-budget premium content for which it has shelled out upwards of $100,000 per minute. The company has seven-year licenses on its short-form series; after two years, content owners have the right to assemble the shows and distribute them elsewhere.
When Quibi launched this past April, it stuck to its original vision of a built-for-mobile viewing experience just as the COVID pandemic kept millions of consumers homebound. Katzenberg insisted Quibi’s “quick-bite” content was meant to be watched on smartphones. Only this week did the company launch apps for viewing on living-room TVs on Apple TV, Amazon Fire TV and Google TV/Android TV devices.
Even after Quibi’s initial subscriber numbers came in lower than its ambitious forecasts, Katzenberg professed to remain bullish on Quibi’s prospects: “I’m still quite optimistic this is gonna work,” he said at an industry conference in June.
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 (now ViacomCBS), 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.
In March 2020, just ahead of Quibi’s April 6 debut, the L.A.-based company announced an additional $750 million tranche of funding from existing and new investors (which it did not identify).
Quibi had about 50 original titles at launch, including shows featuring originals with Jennifer Lopez, Chrissy Teigen, Chance the Rapper, Liam Hemsworth, Sophie Turner, Lena Waithe, Nicole Richie and Reese Witherspoon. It also greenlit pricey projects with Steven Spielberg, Sam Raimi, Antoine Fuqua, Anna Kendrick, Rachel Brosnahan, Issa Rae, Kevin Hart, Steven Soderbergh and the Kardashians, among others.
According to Katzenberg, in the first year, Quibi had planned to launch some 175 original series and 8,500 episodes, but clearly that will not actually happen now. It’s uncertain which of Quibi’s content partners will try to salvage their shows with the company’s demise.
The Quibi service, which is ostensibly aimed at consumers 18-34, costs $4.99 monthly with ads and $7.99 per month without ads.
Quibi last year said it sold out its first-year ad inventory with $150 million in commitments from advertisers including Google, P&G and PepsiCo. The company inked a distribution deal with T-Mobile, which has offered Quibi free for one year to subscribers on unlimited wireless family plans.