Disney, NBCUniversal, Viacom, Sony Pictures Entertainment, WarnerMedia, Lionsgate, MGM, ITV, Entertainment One — the list of Hollywood heavy hitters that poured money into Quibi is a veritable who’s who of entertainment industry giants. Now, with the closure of the mobile streaming startup led by Jeffrey Katzenberg and Meg Whitman, just six months after launching, so goes nearly $2 billion in investment dollars.
In a statement released Wednesday, Quibi announced plans to wind down operations and initiate the sale of its assets, after which “remaining funds will be returned to its investors as specified in the Company’s operating agreement.”
Whitman and Katzenberg wrote in an open letter to Quibi’s staff, investors and partners that “we feel that we’ve exhausted all our options.”
“As a result we have reluctantly come to the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our colleagues with grace,” they wrote. “We want you to know we did not give up on this idea without a fight.”
Initially dubbed “NewTV” and housed under the holding company WndrCo, Katzenberg and Whitman courted and secured $1 billion in seed-funding in 2018 from every major Hollywood studio, as well as venture capital firm Madrone Capital Partners, major banks Goldman Sachs and JPMorgan Chase & Co, and John Malone’s Liberty Global. The company also won an investment from China-based e-commerce giant Alibaba Group, which owns major streamer Youku Tudou.
Quibi would later close a second round of funding, adding $750 million to its coffers just a month before the service launched to the public in April of this year, bringing its total investment sum to $1.75 billion. And Whitman told Variety last year that the company had sold $100 million in upfront ad inventory well ahead of its launch.
Despite the skepticism Katzenberg and Whitman’s company has faced since its founding, those high-profile investments offered industry watchers a sense that Hollywood’s legacy institutions thought the startup had a chance at breaking through the noise with its highly produced bursts of TV and movie content.
Quibi CFO Ambereen Toubassy had told Variety in March that the second raise provided Quibi with a “very strong cash runway” that would give it “tremendous flexibility and the financial wherewithal to build content and technology that consumers embrace.”
But the product launched a month into a pandemic that forced millions of Americans to go into lockdown mode at home. That meant Quibi was never quite given the chance to test out Katzenberg’s theory that viewers would pay to watch slices of dramas and unscripted shows while waiting in line for coffee at Starbucks, as he envisioned. And Quibi struggled to attract paying subscribers, with the Wall Street Journal reporting in June that the company was on track to hit only 30%, or fewer than 2 million, of its original 7.4 million sub target.
As more begins to trickle out about the state of the company, sources say Quibi has an all-hands internal meeting set for 6 p.m. ET today.
“While we have enough capital to continue operating for a significant period of time, we made the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our talented colleagues with grace,” said Whitman in the statement. “We continue to believe that there is an attractive market for premium, short-form content. Over the coming months we will be working hard to find buyers for these valuable assets who can leverage them to their full potential.”