After only six months in operation, a much vaunted streaming service has been scuttled in one of the most high-profile corporate failures in years.
After only six months in operation, the much vaunted $2.4 billion ($US1.8 billion) streaming service Quibi is calling it quits.
According to the Wall Street Journal, co-founder Jeffrey Katzenberg called investors to tell them the service is shutting down. The report said Katzenberg and Whitman made the decision to scuttle Quibi and return what money they could to investors rather than prolong the inevitable.
The quick death of Quibi will go down as one of the most high-profile and embarrassing corporate failures this century so far. Investors in Quibi had so much misplaced faith in Katzenberg and fellow founder Meg Whitman’s idea, they put billions behind the venture.
Katzenberg is the co-founder of Dreamworks studios while Whitman was the head of Hewlett Packard and a former presidential candidate.
Despite paying above-market rates to sign on a slew of big-name celebrities including Reese Witherspoon, Chrissy Tiegan, Kevin Hart, Anna Kendrick, Liam Hemsworth, LeBron James and Bill Murray, Quibi never took off with audiences.
Katzenberg and Whitman made the decision to forge ahead with Quibi’s launch timetable despite it coinciding with pandemic lockdowns in their key markets including the US.
Consumers didn’t know what to make of a service that could only be watched on small screens at a time when they were spending time at home. The platform only added the capability to watch its content on TV screens at a later time.
Even Quibi’s generous 90-day trial period did little to entice audiences. According to Deadline, the service only converted 8 per cent of its sign-ups to paid subscribers – though Quibi sources denied it at the time.
Other streaming services such as Netflix found their viewership increased during the lockdown, although Netflix failed to hit subscriber targets for its most recent earnings report.
Quibi had quietly launched in Australia alongside the US with the app available on the first day, but did not officially launch here until August when subscription prices were offered at a lower rate of $6.99 a month.
Whitman said to Deadline: “Jeffrey and I have been clear-eyed at the data and said what’s the right thing to do. In order to get scale we would have to raise more capital, a lot more capital and we would need to be raising it in the first part of next year.
“And we don’t think that we would have the data and the metrics to support another capital raise at that point.”