The Sad Story of Jeffery Katzenberg's Company That Failed in Just 6 Months
Entrepreneur's New Year’s Guide
You may not have even heard of this company, but it was one of the biggest failures of the year, and considering that we are talking about 2020, that is saying a lot. A few weeks ago, its co-founder Jeffrey Katzenberg , nothing more and nothing less than one of the directors in charge of the Dreamworks animation studios, announced the closure of the company less than a year after its launch.
Quibi was born when Katzenberg and Meg Whitman , Quibi CEO and former Hewlett Packard CEO, raised more than $ 1.75 billion to create a video streaming service platform that would have original content and that you could subscribe to for $ 4.99 per month ( about 100 Mexican pesos at the current exchange rate).
Like Netflix, Dinsey +, and Amazon Prime Video, Quibi also produced its own content, but the difference was that they were five to 10 minute episodes intended to be consumed on smartphones. Initially, iOS and Android mobile devices were used, but later their use was expanded to Chromecast and AirPlay.
In this way, Quibi wanted to be the platform for the "next generation of storytelling." It had everything to succeed: an executive team with entertainment experience (again, Katzenberg was at the helm), nearly $ 2 billion in funding, dozens of renowned Hollywood actors on board, and unmatched penetration of mobile device use. .
So what went wrong?
In a word: timing .
Unfortunately Quibi came at a time when people had to stay home longer due to the COVID-19 pandemic. The main idea behind Quibi was that people could use the platform to watch short episodes while doing activities like getting around on public transport, eating at the office, waiting for a doctor's appointment, etc. That is, in all the activities that were stopped with the confinements caused by the coronavirus.
In other words, Quibi had a target audience, students and young professionals, whose needs changed from one day to the next. With the quarantines, people preferred to watch long-term content on platforms such as Netflix, Amazon Prime Video, Disney +, Hulu, among others.
On October 22, Katzenberg formally announced the closure of the platform . The Wall Street Journal noted that the main cause of this failure was that Quibi had a smaller audience than expected and a disappointing number of downloads.
However, the company also made a number of mistakes. For example, CNBC News noted that Quibi's social media strategy was quite weak, something unforgivable for a platform that had a mobile-based approach and was geared toward Gen Z.
On the other hand, Quibi entered an incredibly saturated streaming content market and its only differentiator, its high-quality short clips, lost its value with the products offered by other platforms and social networks such as TikTok.
Image: SOPA Images | Getty Images
In addition, the business model was strongly betting on paid users who would join the platform after the 90-day free trial. However, only 10% of all users paid the monthly payment. In this way, of the 7 million premium users that they had projected, Quibi closed its doors with just two million subscribers.
And finally, Quibi decided to invest its initial budget in a huge launch campaign, which included a very expensive commercial in the Super Bowl (above), instead of having a strategy of attracting new clients in the long term.
Sadly, Quibi arrived at the worst time. The coronavirus pandemic made people who consumed content on the go on their phones (in the subway, waiting for morning coffee, etc.), to stay home and take the opportunity to watch series and movies on their televisions and laptops.
In the end, perhaps the most interesting story Quibi generated was that of his own failure.