Quibi’s $1.4 Billion to Nowhere. Questions for a Hollywood / Silicon Valley Mobile Video Platform

Quibi’s announcements about its April launch reveal an over-capitalized plan that runs counter to the prevailing digital video business model.

  • Quibi is the video streaming venture run by corporate heavies Meg Whitman (CEO) and Jeffrey Katzenberg (founder & chairman.)
  • It is funded by studios led by Disney and Comcast/NBC/Universal, as well as China’s Alibaba and other players.
  • Quibi committed $1 Billion to content, including documentaries and reality.

Following is my recap of the Quibi Plan and my Takeaways:

THE PLAN

  • Short-form content
  • Formatted for mobile
  • Delivered via a mobile app
  • The great majority of the spend is for scripted programs provided by leading Hollywood talent.

Subscription Fee

  • $5/mo for the ad-supported tier
  • $8/mo for the ad-free tier.

Content

  • 50-60 shows at launch
  • Up to 175 originals in Year 1.
  • They include “movies told in chapters,” “episodic, unscripted and docs,” and “daily essentials.”
  • The movie content is 7-10 minutes / clip
  • Other genres: 5-6 mins / clip
  • Quibi aims to launch 3 hours of content per day
  • Most will be “daily essentials,” meaning mainly news and information.

Target Audience

  • 18-34 year-olds

Tech Innovation

  • “Turnstyle” lets users toggle seamlessly between portrait or landscape mode on their mobiles

PETER’s TAKEAWAYS

Hollywood Conceit

  • Jeffrey Katzenberg is a Hollywood corporate legend.
  • He is imposing a Hollywood content framework on the TikTok generation.
  • The heaviest mobile video users are kids who love goofy, “no-cost / low-cost” videos.
  • They share them on Instagram, Snap, YouTube, and recently via the TikTok phenomenon, and its 1.5 Bn app downloads.
  • Quibi’s announced $7.5 Mn / cost-per-episode is a massive misspend for content that’s competing with a silly 15-second dance clip shot in a high school cafeteria.

Pricing: No “Free”

  • Disney + captured up to 25 million subscribers after launch by offering a free trial subscription.
  • Quibi’s Pay Only options don’t promote the sampling that can lead to engagement and subscription

Limited Cross-promotion

  • The Disney+ launch offer was heavily promoted on Disney’s channels, platforms and tourist destinations.
  • Apple’s vast consumer customer base is a comparable rocket driving the launch of its direct-to-consumer service.
  • Can Quibi afford to buy that scale of promotion that it needs to be competitive?

Target Demographics

  • Quibi’s announced target audience is 18-34 year-olds
  • Industry analyst Will Richmond says: “That’s way too old. Quibi’s core target should be 13-20 year-olds, maybe even 10-20 year-olds. Smartphones are extensions of pre-teens’ and teens’ bodies; no other age groups are as attached. This is the mobile video generation!”

Financial

  • Quibi’s $1.4 Bn seems like a lot to throw around.
  • But if its natural audience is 12-20 year olds, Quibi will be waiting – and cashflowing – for a decade until the key demo has the disposable income to spend on a subscription service or appeal to advertisers.

And Then…

  • Lightning can strike, and its possible that Quibi will deliver a game-changing “House of Cards” or “Handmaid’s Tale” that defies the odds that I believe are stacked against the current plan.

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