Fare Thee Well, Quibi (And What Happens Next)

Listen, it’s called the Streaming Wars, so naturally there were going to be casualties along the way. If the #StreamingWars are Game of Thrones, then Quibi was House Tully of the Riverlands, a small house beset by larger enemies on all sides with more people, dragons and money.

To mark the fall of Quibi, let’s figure out what went wrong. Then we’ll explore what happens next, particularly to their content.

What Went Wrong With Quibi?

First, they didn’t have a content library.

A streaming service needs to do two things to survive. First, it needs to entice you to check out the service. And once you’re there, it needs to convince you to stay. The logic of streaming is that buzzy originals do the former and that “library content” (think old sitcoms and procedurals) does the latter.

This isn’t even a new concept to streaming. Traditional cable channels used this approach to grow as well. AMC started out showing classic movies. Then it moved up to newer movies. And eventually into buzzy originals like Walking Dead and Mad Men.

Quibi tried to circumvent this cycle and build all new content to fill out its service. The problem is this is really, really expensive, and they ran through all their cash in the effort. (By the way, Apple TV+ has this same problem, as I noted last year when I called Apple the “Chipotle” of streaming services.)

Second, they didn’t distribute on living room TVs.

While the stereotype of streaming is that it’s all Millennials watching on their phones, the truth is that a supermajority of viewing of television occurs on TV screens. And everyone watches television, regardless of age. Here’s a table from Vox from Netflix’s data:

Yet, Quibi’s pitch was that it was mobile first and foremost. It launched “mobile only” and cut out 70% of actual television viewing…which still occurs on TVs. This mistake more than any other limited its distribution and adoption. People want to watch on TVs, and Quibi said they couldn’t. (Especially stuck at home in a pandemic…)

Third, it’s not clear high-end short form content works.

For all the discussion about Quibi’s original model, it wasn’t the first high-end, short form content company. Verizon had Go 90. Vivendi had Canal+. Jason Kilar previously ran Vessel. All were eventually sold or folded.

The analogy that is fairly old in business is lukewarm tea. Folks love hot tea. Folks love iced tea. No one is clamoring for lukewarm tea. Quibi was lukewarm tea.

The founders are eager to point out they premiered during a pandemic which locked folks indoors and hurt wallets. Yet, other streamers saw booms in subscribers. If the streaming service were viable, Quibi could have survived a downturn. But folks don’t really want high-end short form/mobile content.

What Happens Next For Quibi?

You can’t spend a billion dollars making content and not get anything out of it. For all the scorn/hatred heaped on Quibi, it did make a handful of buzzy shows that some folks genuinely enjoyed. So where will you go to watch them?

It depends. The good news for customers—which is bad news for Quibi—is they had licensed most of the content from major studios. In many cases, to get content they agreed to let the creators keep the rights and only 2 years before the rights reverted back to the original owners. Likely, most of the shows will wind up back with the studios that produced it.

(This is also why no one wanted to buy Quibi: there is no point if they don’t own their content.)

If, of course, there aren’t big fights over the legal rights. Even if a studio owns the long term rights, Quibi may try to argue it controls the rights for the next two years to try to make back some of the $2 billion it lost producing content. Or studios may pay some fee for shows or films they really do want for their streaming services. Everyone is starving for content.

The Entertainment Strategy Guy writes under this pseudonym at his eponymous website. A former exec at a streaming company, he prefers writing to sending emails/attending meetings, so he launched his own website. Sign up for his newsletter at Substack for regular thoughts and analysis on the business, strategy and economics of the media and entertainment industry.