Quibi has become the first causality of the streaming wars. The short-form streaming service founded by Jeffrey Katzenberg with a mammoth $2 billion investment is shutting down its operations after only seven months of operation.
The streaming service will wind down its operations, which the company said Wednesday will take place over the next few months. The company will continue working to find a buyer or buyers for its technology assets and content -- which it tried to distinguish from competitors by presenting in short 10-minute episodes delivered primarily over mobile devices.
"Quibi was founded to create the next generation of storytelling," Katzenberg said in a statement. "We have assembled a world-class creative and engineering team that has created an original platform fueled by groundbreaking technology and IP, enabling consumers to view premium content in a whole new way. The world has changed dramatically since Quibi launched and our standalone business model is no longer viable. I am deeply grateful to our employees, investors, talent, studio partners and advertisers for their partnership in bringing Quibi to millions of mobile devices."
In a separate open letter from Katzenberg and CEO Meg Whitman, the two partially blamed the pandemic for Quibi's failures. "The circumstances of launching during a pandemic is something we could have never imagined but other businesses have faced these unprecedented challenges and have found their way through it. We were not able to do so."
Quibi launched in April but has badly underperformed in an attempt to woo subscribers in the ultra-competitive streaming space. It was among five new entrants alongside Apple, Disney and WarnerMedia that launched within a seven-month span. CBS All Access is also rebranding as Paramount+ early next year.
The service raised nearly $2 billion to serve teenagers and young adults with short-form entertainment, viewed primarily on their phones. But Quibi, which also had to launch amid the pandemic, never gained any traction with consumers -- even those stuck at home during the pandemic seeking entertainment options. Instead, free apps like TikTok have taken off as the platform of choice for teens.
A knowledgeable individual told TheWrap that Katzenberg has been trying to sell the content to other distributors in recent weeks, without success, largely because of the short-form serial format. "The content has to be re-edited to be legitimate," this individual said. "It's designed to have 10 minute breaks for commercials."
The service debuted with a who's who of stars contributing content, including Steven Spielberg, Jennifer Lopez, Kevin Hart and LeBron James. The service managed to net two Emmy wins last month, but most shows have struggled to gain a wide audience.
In June, Quibi was on pace to pull in 2 million subscribers by the end of the year -- well below its own projection of 7.4 million subscribers. And in July, when the 90-day free trial Quibi had offered early users expired, most didn't stick around to pay for their service. (Subscribers pay $4.99 per month for ad-supported streaming and $7.99 per month for ad-free streaming.)
Out of 910,000 people who downloaded Quibi in the three days following its April 6 launch, only 72,000 users converted to paying subscriptions, Sensor Tower reported in July.