The Rise and Fall of Quibi
Seasoned executives Jeffrey Katezenberg and Meg Whitman weren’t too far off the mark when they announced earlier this year that they were launching Quibi, a mobile-only video streaming platform made for being taken on the go. Then the pandemic happened. Video streaming platform usage increased, but Quibi could hardly stay afloat in that opportunity-riddled wave.
Quibi’s main squeeze was that it would offer content in five to ten minute increments, perfect for streaming on the train, in between classes, or even in line at Starbucks. To help attract viewers to the new platform, Quibi spent a large chunk of its $1.8 billion in investment capital on securing major names like Chance the Rapper, Chrissy Teigen, Idris Elba, and Anna Kendrick to star in some of its exclusive shows. Though the app launched in April with “only” 50 works available, Quibi planned to release 175 exclusive shows and more than 8,000 quick bites of content. After a free 90-day trial, users could choose to pay $4.99 per month to continue their subscription with ads, or $7.99 per month for an ad-free experience.
What Went Wrong
Quibi did launch as planned in early April 2020, but its lifespan was shorter than the company ever anticipated. Some industry experts and consumers criticized the platform for being available exclusively on mobile; others suspected it quickly fell from its place at the top of the iOS App Store because few people wanted to pay for a superfluous service in a tight economy. (Out of the 4.5 million people who downloaded the app, only 72,000 ended up opting into the paid service, making for just an 8 percent conversion rate.) Interactive video company Eko sued Quibi for alleged patent infringement and trade secret theft. But most agree that with COVID-19 running rampant throughout the US and hundreds of thousands of former commuters beginning to work from home, opportunity for quick, on-the-go entertainment dwindled. The need that Quibi had intended to fill had vanished.
Like many companies reckoning with the pandemic, Quibi was forced to make a decision: to continue business as usual and risk going bankrupt, or make some money-saving cuts. Motivated to do right by their investors, the company closed its virtual doors, returning $350 million in capital and announcing the decision en-masse via video calls and a letter published on Medium. But as soon as the announcement was made, the rumors began. Why was Reese Witherspoon, star of a Quibi documentary series, taking home $6 million while contractors were struggling to find job security and severances? And had Katzenberg seriously told Quibi’s newly-unemployed staff to listen to “Get Back Up Again,” a song from the children’s movie Trolls, to help lift their spirits?
Quibi officially stopped streaming in October, just six months after its launch—but the platform’s quick demise doesn’t mean shorter-form content streaming is entirely implausible. On the extreme end, TikTok’s 15 to 60 second videos have proven to be a consumer favorite after topping 2 billion downloads earlier this year. Twitch, a live-streaming platform originally made for gaming, now includes categories for creative content, music, and everyday life and has enabled people to pull livable incomes from full-time streaming. And it’s no question that traditional media companies are hungry for a slice of the streaming pie; NBC’s Peacock, FOX’s Tubi, and Disney+ are all hot commodities for people tired of Netflix, Hulu, and HBO.
As the nation still struggles to contain the spread of COVID-19, Quibi is far from the only technology company to suffer from a tight economy and limited engagement. ScaleFactor, an AI accountant for small to medium size businesses, blamed the pandemic in part for its shutdown earlier this year. (Customers and former employees alike say more was at play than just COVID-19.) Around the same time, Airbnb competitor Stay Alfred announced its decision to pause its apartment rentals, then ultimately close for good. Regardless of the specifics of these companies’ downfalls, they likely share the same sentiment from Quibi’s final goodbye: “[It] was a big idea and there was no one who wanted to make a success of it more than we did. Our failure was not for lack of trying; we’ve considered and exhausted every option available to us.”
So, what can other SaaS businesses learn from Quibi? Here are some of our thoughts:
It isn’t the size of an idea that’s dangerous; it’s the feasibility of the market. Without opportunity, even the best ideas are rendered moot. Think Minimum Viable Product (MVP) here. Not only can an MVP help you discern what works (and what doesn’t) with your product, it can also help you establish your Market Fit. So, while Quibi may have been an excellent idea, it could have been to their benefit to test the market a bit more without pouring large amounts of money on the product. As aforementioned, Quibi garnered an enormous amount of downloads, but when it came to retaining actual paid users, the churn rate was astronomical. To avoid a similar catastrophe, focus on the MVP and, to our next point…
Listen to your users. Though Quibi had a flashy, celebrity content base, the wheels largely came off due to a failure in truly understanding their customers. To tie things back to MVP, companies should utilize customer feedback to build out or optimize their app. Launching something with all of the bells and whistles when people may only desire the nuts and bolts is not only a waste of time but a waste of developing, capital, and reputation. Do your research. Listen to your customers. And find out what they will be willing to pay for.
Money can’t buy everything. Beyond having a strong MVP, your marketing strategy comes second in line. While money may help you fight a few extra rounds, your business won’t achieve profitable growth without your MVP and a solid marketing plan. As aforementioned, Quibi failed because they didn’t particularly listen to their users and threw huge amounts of capital at un-engaging content. The app was geared toward 18-34 year olds, yet that wasn’t easily identified due to their content and confusing ad campaigns. Pay attention to your users, and learn how to communicate and cater to their interests through smart marketing.