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Quibi’s Slow Start Is Due to Having No Popular Titles, Poor Marketing — Analysis

Despite execs arguing that the pandemic hurt the service, analysts counter that Quibi is floundering due to strategic flaws from the outset.

Will Forte and Kaitlin Olson in the Quibi original series, "Flipped"

Will Forte and Kaitlin Olson in Quibi’s “Flipped”

Patrick McElhenney

One of the defining strengths of Quibi, the short-form streaming service that launched on April 6, was its ability to court a wide variety of advertisers. But now, nearly two months after launch and with viewership staying low, some of the major companies that advertise on the streaming service are reportedly becoming concerned about the platform’s slow start.

The Wall Street Journal reported last week that Quibi advertisers such as PepsiCo, Yum Brands, Anheuser-Busch InBev, and Walmart are among the companies seeking to defer payments due to the streaming service’s low viewership numbers. Representatives from those companies did not return requests for comment.

The apparent concerns among Quibi’s advertisers cast further uncertainty on the streaming service’s long-term viability. Viewership at most competing streaming services is on the rise due to the ongoing coronavirus pandemic, but the mobile-only Quibi, which raised $1.75 billion prior to launch and regularly releases 10-minute (or shorter) episodes of its original series, has not reaped similar benefits. Quibi has also contended with executive turnover — Megan Imbres, who handled Quibi’s brand and content marketing, departed in April — and has begun to cancel shows as it looks to keep costs down. Quibi told employees in a recent internal memo obtained by IndieWire that its senior leadership team has volunteered to take a 10 percent pay cut and stressed that it would not be laying off staff as part of cost-saving measures.

Quibi founder Jeffrey Katzenberg expressed disappointment with Quibi’s early performance in a New York Times interview in May. While Quibi hasn’t released viewership numbers for any of its shows, CEO Meg Whitman told IndieWire in a recent interview that Quibi had been downloaded 4.2 million times as of May 26. The number of users who are actually using Quibi is less clear; Katzenberg told the New York Times that Quibi had 1.3 million active users as of May 11 and the number of paying users is likely less, as Quibi has offered free trials that run for as long as 90 days for some early adopters with select wireless providers.

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Netflix, by comparison, had around 182 million subscribers as of April 21, while Disney recently said its Disney+ service, which launched late last year, had over 54 million subscribers as of May 5. Though Quibi has reportedly fared better with mobile users compared to WarnerMedia’s new HBO Max, which Bloomberg reported had only 90,000 first day mobile downloads, HBO Max is also available on computers and most smart televisions.

Though Quibi has partnered with a variety of popular filmmakers and actors, such as Chrissy Teigen and Liam Hemsworth, the streaming service’s unclear marketing and dubious value proposition have made it difficult for the platform to connect with prospective subscribers, according to Nitesh Patel, the director of wireless media strategies at research firm Strategy Analytics.

“Despite all the big names that have been involved with Quibi, like celebrities, shows, and directors that are contributing content to the platform, I still don’t know what Quibi actually means to people,” Patel said in an interview. “Part of the problem has to do with the value proposition. People don’t know what Quibi is and the content might not be there or optimized accordingly. In order to counteract that, they’ve extended the trial period to three months because they recognized that it will take some time for people to understand the service.”

A subscription to the ad-supported version of Quibi costs $4.99 per month, while a subscription to the ad-free version costs $7.99 per month. Though cheaper than most other streaming services on the market, Quibi faces fierce competition in a highly-competitive market. The popular Disney+ has expanded its subscriber base in recent months and NBCUniversal is gearing up to release its Peacock streaming service nationally on July 15.

Whitman, who served as president and CEO of eBay and helped the online retailer become one of the internet’s leading businesses, argued that some of the confusion around Quibi was due to the service offering an entirely new experience for consumers that is unlike the streaming services already on the market.

“We are creating a new category and it’s not that dissimilar to what I did with eBay, when nobody knew what e-commerce was,” Whitman said in an interview. “What we’re doing does not exist, so it doesn’t fall into a neat bucket. We’re premium video content on your mobile device with a unique viewing technology. It’s something that doesn’t exist, which is why it’s a little hard to explain. But people who use it understand it.”

The unique viewing technology Whitman referred to is called Turnstyle, which allows users to seamlessly switch between horizontal and vertical displays. Turnstyle allows Quibi content creators to display different scenes or character perspectives in their project depending on which way a smartphone using the Quibi app is held.

Katzenberg and Whitman stressed in the months leading up to Quibi’s launch that they did not see streamers such as Netflix or Hulu as rivals, as Quibi was designed to be used while users are outside during the day, such as in line at a coffee shop or while on public transportation. While Quibi’s Turnstyle technology is unlike any viewing feature on other streaming services, Quibi is still a mobile phone-oriented platform and a subscription-based streaming service, which means that it is inevitable that it will compete with preexisting subscription-based streamers, as well as popular free apps such as YouTube and Snapchat, according to Patel. He added that there have already been platforms similar to Quibi, such as the now-defunct go90 from Verizon and Vivendi’s Studio+.

“We’ve seen go90 from Verizon, which was ad-funded and completely free, and it still didn’t gain any attraction,” Patel said. “If we give them a bit longer, perhaps consumers will have more of an incentive to dip in. That said, the amount of competition is absolutely huge due to things such as mobile gaming and social apps like TikTok and WhatsApp that are all taking time away from Quibi.”

Regardless of what platforms it intends to compete with, Quibi’s mobile-only “on-the-go” design philosophy has been challenged by the coronavirus pandemic, which has forced most Americans to stay indoors, where they already have access to large televisions and computer screens that boast all of the industry’s popular streaming services. Katzenberg addressed how the ongoing pandemic has challenged Quibi in an interview with the New York Times in May.

“I attribute everything that has gone wrong to coronavirus,” Katzenberg said in the New York Times interview. “Everything. But we own it.”

Jeffrey Katzenberg speaks at the Produced By Conference at Warner Bros. Studios, in Burbank, CaliforniaProduced By Conference 2019 - Day 1, Burbank, USA - 08 Jun 2019

Quibi co-founder Jeffrey Katzenberg speaks at the Produced By Conference at Warner Bros. Studios, in Burbank, California

Mark Von Holden/Invision/AP/Shutterstock

Whitman noted that the pandemic has posed difficulties for the streaming service but said that the platform was making moves to adapt to the situation.

“The use case we really thought was the on-the-go mobile viewing from 7 a.m. to 7 p.m.,” Whitman said. “You’d leave the house and get a cup of coffee or watch Quibi while waiting at a doctor’s office. Of course, we launched on April 6, when people weren’t on-the-go. Right at the start we had requests for TV viewing, so we responded right away and launched AirPlay on (May 26) and Chromecast will be coming in a couple of weeks.”

Quibi’s Turnstyle technology does not work on AirPlay. The platform’s content is also unable to be shared via screenshots or video clips — a key way Quibi’s targeted millennial demographic tends to discuss films and TV shows — but Katzenberg told the New York Times that that feature would be coming sometime in the future.

There’s no doubt that the coronavirus has impacted Quibi, but the platform’s most significant challenge has and will continue to be justifying its price tag when there are so many competing services that boast high-quality original films and television shows, according to Danyaal Rashid, a thematic analyst at analytics firm GlobalData.

“Of all the streamers out there, Quibi is the most impacted (by the pandemic) because it positioned itself as ‘something on-the-go,’” Rashid said in an interview. “The more important thing is the price, when you have Disney+ at $6.99 per month or basic Netflix for $8.99 per month. Price really shaped what has happened with Quibi. Quibi is trying to forge is own segment in the market but to gain value it will always come out to content. It needs to start to attempt to lead in content to warrant that dollar figure.”

Quibi launched with 50 titles and has promised to release 175 series within its first year. Its release schedule includes three hours of new content every weekday, and many of Quibi’s releases are star-studded: Idris Elba, Chance the Rapper, and Christoph Waltz are but a few of the many well-known Hollywood celebrities who star in Quibi shows, while A-listers such as Jennifer Lopez, Reese Witherspoon, Guillermo del Toro, and Steven Spielberg have created or have plans to create Quibi projects from behind the camera.

DM_DAY18_EP4_OCT16_SW_0076.ARW

Liam Hemsworth in the Quibi series “Most Dangerous Game”

Steve Wilkie

Although Quibi has partnered with numerous well-known talents to produce or star in its exclusive titles, none of Quibi’s releases have come close to the popularity of series such as “The Mandalorian” or “House of Cards,” the first original series on Disney+ and Netflix, respectively. Critics and journalists haven’t taken to Quibi’s releases either, given the service’s relative lack of post-launch media coverage. Quibi aggressively pitched its titles to journalists in the year leading up to launch and the quantity of Quibi’s similar press releases about its upcoming series made it difficult for critics to differentiate the titles. Star-studded action shows were promoted similarly to sobering documentaries, which caused Quibi’s potentially standout projects to get lost in the mix.

The streaming service also does not offer any acquired content, which was a key marketing point for competitors such as HBO Max, which spent hundreds of millions to acquire the rights to hit shows such as “Friends” and “The Big Bang Theory.” Acquired content was also a significant draw for prospective Disney+ subscribers, given that the platform contains a large amount of popular films and television shows from brands such as Disney, Marvel, Star Wars, and Pixar.

Quibi must find a way to entice viewers and the platform will need to do more to sell itself beyond boasting that its short-form content is well-produced, according to Doug Clinton, managing partner of tech VC fund Loup Ventures.

“They need to find a way to attract people who want to watch these kinds of shows instead of what they’re watching on YouTube or Instagram,” Clinton said. “A lot of YouTube content is under 10 minutes long and is shot professionally. Having a popular show would definitely help because finding some way for the platform to ingratiate itself with pop culture is important.”

Analysts were somewhat split on how Quibi could course-correct in the months ahead. Clinton suggested that Quibi should focus more on influencer-led content, which could better appeal to the millennial demographic that Quibi is targeting, while Patel suggested that partnerships and bundling — such as getting more ISPs or device makers to install the app onto smartphones — could boost the platform’s usage.

However, both analysts, as well as Rashid, agreed that Quibi would need to market itself better if it wanted to court new subscribers and retain the users who signed up for the 90-day free trials that will be ending in July. Quibi attempted to lean into the confusion in the months leading up to launch — it briefly changed its Twitter name to “WTFisQuibi” in January — but the streaming service will need to get serious about catering to its target audience if it wants to stand out in the market, according to Rashid.

“They hit the market quite hard on social media but it seemed a bit comical,” Rashid said. “People were making fun of what they were getting at. They were targeting millennials and hitting all the millennial buzzwords like ‘short form,’ but they forgot what millennials are renowned for, which is binge watching. They pulled binge watching out of the equation which is crazy, given who they are marketing for. I think there were strategic flaws from the beginning.”

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