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Three Reasons Why Quibi is Shutting Down

Three Reasons Why Quibi is Shutting Down

Three Reasons Why Quibi is Shutting Down
Michael Lantz
CEO
INSIGHTS BLOG /
 October 2020

I, and many others in the industry, have been fascinated with Quibi over the past 24 months. It’s been a gutsy billion-dollar start-up, betting on new business models and new usage paradigms but in a fast-growing, gigantic market. This week, it all came to a halt when Quibi announced that it will be winding down its operations.

I’m actually of the personal opinion that there was nothing wrong with the underlying business idea, which is that many users are looking for high quality, but bite-sized content. There are many benefits with this approach, which should definitely be attractive for “the social media generation”. Of course, YouTube would be a formidable competitor, but as in any market you need to find your USPs and your niche and grow from there. It’s impossible to imagine that people will move away completely from YouTube to another service, but it’s certainly possible to see a service like Quibi being able to complement YouTube. 

So, why didn’t Quibi succeed? In my opinion, there are primarily three reasons. 

Being too enamored with the Netflix/Disney+ strategy

It’s clear that both Netflix and Disney+ have been huge successes. Both companies have similar strategies with a focus on original content, advanced and sizable in-house technology teams, and a push for SVOD as the sole revenue driver. But just because they have been successful, that doesn’t mean that every OTT service can copy that strategy which involves heavy spending to scale up in-house teams and create original content. Perhaps a focus on learning about the user behavior for premium bite-sized content could have been more impactful along with a greater reliance on licensed content and external technology to scale up faster? Gradually, over time, increased investment in original content would certainly have been necessary but could have been made in lockstep with real customer demand and a thorough understanding of consumer behavior.

Too focused on the mobile use case

It is obviously logical for a service which focuses on a “short-form use case”, to be a mobile-first company. The obvious use case would be millennials sitting at Starbucks consuming 10 minutes of the latest episode of one of the many clever series Quibi has rolled out.

However, what Quibi misjudged was the fact that even if that use case is true, most consumers use both the mobile AND the big screen to consume content. By not being available on the big screen initially, consumers didn’t feel that Quibi was a “real OTT service”, which impacted their willingness to subscribe and absolutely impacted consumption. I believe there was a significant market for binging on the Quibi content in the comfort of your living room, which would have created more loyal users and more buzz around the service.

Extremely bad timing

The impact of Quibi launching on April 6, 2020, in the middle of the worst phase of the Covid-19 pandemic, cannot be understated. While the pandemic has been good for driving usage of OTT services, clearly, Quibi’s focus on a mobile-first, short-form service, would suffer in comparison with more immersive, home-centric OTT services like Netflix, Disney+ and HBO Max. On top of this, it’s very difficult to get attention for an entirely new brand name when consumers are distracted by the biggest recession on record and a life-threatening pandemic. Instead, when they wanted to splash out on more video services, they went for trusted brands. For example, HBO Max launched less than two months after Quibi and has already reached tens of millions of subscribers.

Even with some of the perceived flaws in Quibi strategy and execution, there is an element of bad luck here. In a normal market, maybe it would have been able to build enough momentum to have time to adapt to become competitive.

At Accedo, we have been fortunate enough to work with the extremely talented Quibi technology team for some time. Our technology team thoroughly enjoyed the collaboration with Quibi and we have been impressed with the attention to quality, innovation, and the user experience. We would have loved to have seen the service take its rightful place in the market. I’m convinced that we’ll see similar innovations emerging, at which point maybe the timing and the market entry would be better.

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