Film producer and former Disney executive Jeffrey Katzenberg is pulling the plug on Quibi, the short-form video streaming startup he launched with PayPal Co-Founder Ken Howery, The Wall Street Journal reported Wednesday (Oct. 21).
The entertainment startup produces original, short-form entertainment for smartphones and raised a total of $1.75 billion in pre-launch funding from 14 investors. Daily operations are headed by Katzenberg and veteran Silicon Valley tech executive Meg Whitman, who serves as Quibi’s chief executive officer.
After unsuccessfully shopping around for a buyer, a restructuring firm hired by Quibi gave other options to the company’s board of directors. One scenario called for the company to shutter.
On Wednesday, Katzenberg called investors to say the streaming service was shutting down, WSJ reported, citing sources.
When Quibi went live in April, both viewers and downloads of the app were below expectations as the coronavirus pandemic shifted people’s attention away from mobile entertainment. Further, the company was also hit with a lawsuit from a rival.
Quibi had initially generated a lot of buzz, and nailed $150 million in advertising deals ahead of launching. Advertisers included big brands and household names like Pepsi, Walmart, and Anheuser-Busch.
Sources told Variety that Quibi was holding an internal all-hands meeting at the end of the work day on Wednesday.
Katzenberg raised $1 billion in Quibi’s first funding round in 2018 but it wasn’t enough to cement an audience. A recent survey indicated that one-third of Quibi’s 1.5 million subscribers said they were planning to cancel after their 90-day free trial. Quibi features short videos that tell a story over the course of several chapters.
In the crowded subscription as a service (SaaS) space, success comes not just from the acquisition of new users, but from customer retention. Sharath Dorbala, CEO of the subscription management platform Vindicia, told PYMNTS last month that “retention is the new growth.”
The new streaming subscription entertainment service Disney+ is attracting viewers and posted a strong Labor Day, with downloads of the app up about 68 percent. “Mulan” on Disney+ had a better opening than the movie theater release of Christopher Nolan’s time travel-thriller “Tenet.”