$2.4b streaming service shuts down
After only six months in operation, the much vaunted $2.4 billion ($US1.8 billion) streaming service Quibi is calling it quits.
According to the Wall Street Journal, co-founder Jeffrey Katzenberg called investors to tell them the service is shutting down. The report said Katzenberg and Whitman made the decision to scuttle Quibi and return what money they could to investors rather than prolong the inevitable.
The quick death of Quibi will go down as one of the most high-profile and embarrassing corporate failures this century so far. Investors in Quibi had so much misplaced faith in Katzenberg and fellow founder Meg Whitman's idea, they put billions behind the venture.
Katzenberg is the co-founder of Dreamworks studios while Whitman was the head of Hewlett Packard and a former presidential candidate.
Katzenberg and Whitman soon confirmed the news to Deadline, adding that there will be a two-month wind down to cease operations.
The pair conceded that the business had tried a number of marketing strategies over the past few months but nothing made enough of a difference.
"There was no question that keeping us going was not going to have a different outcome," Katzenberg told Deadline. "It was just going to spend a whole lot of money without any value to show for it.
"So out of respect for these people that put up this extraordinary amount of capital to do it, that's irresponsible and we both felt we shouldn't do it."
Quibi launched in April to fanfare as a new type of streaming service with short-form content made specifically for mobile devices. The idea is that viewers can watch five-to-10 minute episodes while waiting in line for coffee or on their commutes.
Despite paying above-market rates to sign on a slew of big-name celebrities including Reese Witherspoon, Chrissy Tiegan, Kevin Hart, Anna Kendrick, Liam Hemsworth, LeBron James and Bill Murray, Quibi never took off with audiences.
Katzenberg and Whitman made the decision to forge ahead with Quibi's launch timetable despite it coinciding with pandemic lockdowns in their key markets including the US.
Consumers didn't know what to make of a service that could only be watched on small screens at a time when they were spending time at home. The platform only added the capability to watch its content on TV screens at a later time.
Even Quibi's generous 90-day trial period did little to entice audiences. According to Deadline, the service only converted 8 per cent of its sign-ups to paid subscribers - though Quibi sources denied it at the time.
Other streaming services such as Netflix found their viewership increased during the lockdown, although Netflix failed to hit subscriber targets for its most recent earnings report.
An extensive investigation published by Vulture soon after Quibi's launch revealed many problems behind the scenes at the company, including allegations that Katzenberg and Whitman had a fractious relationship.
Quibi had quietly launched in Australia alongside the US with the app available on the first day, but did not officially launch here until August when subscription prices were offered at a lower rate of $6.99 a month.
Whitman said to Deadline: "Jeffrey and I have been clear-eyed at the data and said what's the right thing to do. In order to get scale we would have to raise more capital, a lot more capital and we would need to be raising it in the first part of next year.
"And we don't think that we would have the data and the metrics to support another capital raise at that point."
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Originally published as $2.4b streaming service shuts down