“Quibi is dead,” announced Jefferey Katzenberg on October 21.
There are two types of startups: grassroots startups and those “born” with a silver spoon in its mouth. Quibi belongs to the latter.
Since its inception, Quibi had everything it needed to succeed in a highly competitive market. Co-founders Jefferey Katzenberg, former DreamWorks executive, and Meg Whitman, former eBay CEO, hired top talent from Hollywood and Silicon Valley to launch and safeguard their brainchild. Quibi raised more than $1.7 billion in financing before its launch with heavyweight investors like Walt Disney, Warner Media, Goldman Sachs and other top-tier corporations. Its future seems unlimited.
All the initial hype made Quibi’s eventual collapse seem improbable. Katzenberg blamed the COVID-19 pandemic. But a closer look suggests that Quibi was destined to fail from the onset.
Katzenberg’s innovation shows that he misunderstands the streaming service market.
Katzenberg wanted to deliver Hollywood-caliber content in short, episodic chapters. He envisioned a segmented market of Gen Z viewers who would stream digestible content on the go, satisfying their shorter attention spans.
When matched against streaming giants like Netflix and HBO, Quibi lacked the breakout content it needed to attract younger viewers beyond the free trial period. Quibi bet that Gen Z consumers would pay for 10-minute-long, episodic chapters that were produced by traditional Hollywood superstar talent.
But younger audiences are used to consuming free short-form video content on YouTube and TikTok. While the company was very proud of creating “Emmy Award-winning content in a very short time,” the recognition was not compelling enough for the target market to pull out their credit cards and sign up. Content building is time consuming. There is no way for Quibi to win the market from the hands of media conglomerates who have laid a strong content foundation since the beginning.
Katzenberg’s reliance on elite Hollywood producers was a classic case of having the right talent at the wrong time. Quibi’s investment in outdated Hollywood celebrities demonstrates Katzenberg’s misunderstanding of the market.
Katzenberg’s mobile-only approach backfired.
Platform variety still matters. Quibi opted to fight that desire for choice and instead prevented subscribers from sharing content on social media. The TikTok era has proven that Generation Z craves shareability: the easier to share, the higher chance of going viral. Quibi chose the opposite. The company depended on traditional advertising to reach potential consumers, making it an advertiser-friendly platform, yet not a user-friendly platform. By preventing screenshots, Quibi loses valuable customers and decrease its presence on social media that should be an integral part of its Gen Z-oriented marketing strategy.
Katzenberg overestimated Quibi’s “Turnstyle” technology that allowed consumers to shift seamlessly from landscape to portrait orientation. Consumers only need this feature at the beginning of a movie to adjust their viewing preferences. The notion that viewers would be constantly adjusting their screens on the go was a bit far-fetched. But even worse, it negated a key value proposition that Katzenberg hoped would captivate subscribers and transform viewing patterns.
Silicon Valley does not hold a monopoly of Gen Z loyalty. But Hollywood needs to reconsider its approach the next time it seeks to bridge the gap between quality content and popular technology platforms.