”No one believed in his own idea and his own ability to will Quibi into existence more than Jeffrey,“ one Hollywood executive says
How big a stain on Jeffrey Katzenberg’s record is the failure of Quibi?
The veteran Hollywood executive has been the driving force behind some of the industry’s epic successes in modern times — notably the revival of Disney Animation in the late ’80s and early ’90s with its signature hit “The Lion King.” DreamWorks SKG, co-founded with Steven Spielberg and David Geffen, was a hugely ambitious attempt to establish a major Hollywood studio at the turn of the century. Out of that venture came DreamWorks Animation, which brought us delightful films and epic blockbusters like “Shrek,” “Trolls” and “How to Train Your Dragon.”
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But Katzenberg’s prominence in the clubby world of Hollywood masked the reality that many of his most ambitious ventures failed to fulfill their promise: DreamWorks never achieved orbit, ultimately selling to Paramount. DreamWorks Animation was spun off as Katzenberg’s project, which he spent years building and finally sold to NBCUniversal in 2016, an outcome that many regarded as a lucky save. His early internet evangelism foundered in Pop.com, and his near-religious ardor for 3D movies — which he predicted would transform the movie business — came to naught.
Still, all of these pale beside the $2 billion implosion of Quibi, which launched in April and will shut down on December 1 after less than a year of operation.
“There’s an odd phrase that is often spoken about Jeffrey — ‘Don’t bet against Jeffrey,'” one veteran executive said. “No one works harder. No one sells harder. No one recruits better. And no one believed in his own idea — its supposed brilliance, and his own ability to will Quibi into existence — more than Jeffrey… But the hubris of Quibi — the arrogance, the audacity — that’s what takes my breath away.”
The veteran executive’s take was echoed in conversations across Hollywood last week, including among Katzenberg’s many friends, few of whom would speak for quotation. In an industry normally fueled by schadenfreude, the end of Quibi was regarded with rueful regret for the squandered investment, the jobs lost, the aborted projects. And, significantly, the blinkered drive of Katzenberg himself — focused on an epically big swing as he neared his seventh decade. (Katzenberg declined to be interviewed for this story.)
Wall Street drew a similar conclusion as those in Hollywood — though investors on the street were mostly unaffected by the demise of the streaming upstart. Quibi raised $1.8 billion from private investors, but made only $3.3 million in subscription revenue, according to Apptopia.
“It’s a major black eye for Katzenberg and the whole team,” Wedbush analyst Dan Ives said last week. “It’s just staggering how quickly this came and went.”
Loup Ventures analyst Doug Clinton added, “Sometimes when you have companies and entrepreneurs, they go off and have really big ideas — and sometimes those don’t work out. No one is immune from that, not even Jeffrey Katzenberg.”
While insiders praise Katzenberg for his vision and resolve, they note that those qualities may have blinded him to the shortcomings of creating an independent subscription streaming service just as most Hollywood conglomerates from Disney to NBCUniversal to WarnerMedia were launching their own.
The move was signature Katzenberg, an indefatigable comer who may have heard and ignored the chorus of nay-sayers suggesting that he and Meg Whitman, 64, were ill-suited to predict the habits of the teenagers and young adults who were Quibi’s target market. In the end, the core misfire was betting that Gen Y and Z were hungry for high-quality, short-form content to watch exclusively on their phones — and willing to pay a monthly fee for it.
“What’s brilliant about him is he has boundless determination and energy,” said one veteran agent, who declined to use his name. “Couple that with his contacts and financial resources, he can get things going. He can get it done. (But) like anyone, the fact that you can get it done doesn’t mean it should have been done… And in this one, he was messing in an area that wasn’t in his experiential wheelhouse. It was an intellectual judgement, not his experience.”
The veteran executive added: “It was fascinating to watch the idea of Quibi develop. He talked to literally everyone about it, endlessly. And I am confident that… there were many others who challenged his premise. There were many who challenged his business model. There are many who challenged his timing. I believe that he largely disregarded the realists. And tried to bend the world to his will.”
Quibi’s flaws may be obvious now, but it’s easy to see how Katzenberg won over investors and A-list content creators.
He holds near-legendary status in contemporary Hollywood, the closest to an imperial Lew Wasserman-like figure that the industry has. Katzenberg is known to work harder than a small army, scheduling three breakfast meetings a day, admonishing staff in a much-repeated aphorism (that may in fact be apocryphal) that if they “don’t come in on Saturday, don’t bother coming in on Sunday.”
He was also the author of a famous memo in 1991, when he was head of the Disney movie studio, that presciently struck at the heart of the problems plaguing the future of the business. (The memo inspired Cameron Crowe’s “Jerry Maguire” manifesto in that film). He advocated for high-caliber talent and big ideas “with which event movies could be made.” He noted: “We… have the internal talent, creativity and absolute ability to control our own destiny.”
And it was true. At Disney, Katzenberg was empowered to lead by CEO Michael Eisner, who had mentored him at Paramount Pictures, where both men had worked under media mogul Barry Diller. Katzenberg’s vision for Disney paid off, as he rebuilt the animation studio after decades of moribund projects and worse financial results. Disney found its crown jewel in the 1994 blockbuster “The Lion King,” accompanied by a top-selling album and hit Broadway adaptation, along with many other successful titles including “Beauty and the Beast” and a rise in stature for ABC television.
Nonetheless, in 1994, Eisner pushed Katzenberg out, publicly citing his lack of confidence in Katzenberg’s business skills. Wounded, Katzenberg turned to ventures that would create his own legacy beyond Eisner and Disney.
That led to DreamWorks SKG, DreamWorks Animation and then Quibi.
A more careful look at Katzenberg’s career would suggest that his gifts lie more as a content executive than as a visionary businessman, although most cite his unquenchable drive as what distinguishes him most. Arguably, Katzenberg’s record as an entertainment entrepreneur never met the high bar of his achievements as an employee at Disney, despite an ambition that never dimmed.
Less kindly, some say the drive to create Quibi “was driven by ego,” as one veteran observer put it. “A desire by two aging executives to find relevance. A desire to invent a new modern digital act — like Barry Diller.”
To that, the veteran agent said: “If Jeff Katzenberg were a stock, I’d hold onto it, and maybe buy some.”
Five years ago, Katzenberg was in a near-fatal car accident that laid him up for weeks. His Tesla was totaled. His right wrist and arm were shattered. Death was a hair’s breadth away. One might have thought that this brush with mortality might have slowed him down.
It didn’t. Instead he redoubled his efforts to sell DreamWorks Animation, which he managed to unload for $3.8 billion the following year, and then threw himself into creating Quibi. “For me, I’ve got to get on that horse and find the next mountain to charge up,” Katzenberg told CNBC on Thursday. “It’s the only thing I know how to do, and I’ve got a lot to prove.”
But in recent days, Katzenberg has privately told friends that, for once, he intended to lie low and “go under the radar” for a minute, according to an individual close to him.
Not that this will be the last we hear of him. “He’s still a legend,” Clinton said. “If I had to bet money on him, I think you’d have to say he’ll rebound.”
Sean Burch contributed to this article.