Quibi, the short-form mobile-only streaming service, is shutting down after just 6 months of operations due to an unviable business model. The streaming service's woes began relatively early on in its life, when it lost a massive number of initial users when its free trial expired.
Quibi started off with some promise, raising $2 billion in funding from major industry names such as Disney (NYSE: DIS) and Viacom (NASDAQ: VIAC) and featuring big names from the entertainment industry. Founded by Jeffrey Katzenberg, a former executive at Disney a co-founder of DreamWorks, and headed by former HP (NYSE: HPQ) CEO Meg Whitman, the company showed promise. Quibi's short-form content, featuring stories typically not exceeding 10 minutes in length, was unique among paid streaming services.
Quibi's content isn't, however, unique among streaming services in general. Short-form content is available for free from numerous platforms, including YouTube (NASDAQ: GOOGL), the most used streaming platform and most visited website on the internet. Additionally, Quibi notoriously lacked any smash hits, putting it at a considerable disadvantage against competitors such as Netflix (NASDAQ: NFLX) and Hulu (parent company Disney).
"Quibi was founded to create the next generation of storytelling," Katzenberg said. "The world has changed dramatically since Quibi launched and our standalone business model is no longer viable."
Signs of trouble for the nascent streaming service began to show in July, when Streaming Tower reported that 90% of the app's users abandoned it after a free trial offered at launch expired. The app's launch numbers weren't much to brag about to begin with, attracting 910,000 non-paying users and only retaining 72,000 after the free trial ended.
The coronavirus pandemic also had a major role in the demise of Quibi. The app's short-form content was intended for consumers on the go, with little time to watch full episodes of shows, being mostly intended to be enjoyed during a car pool to work or on one's lunch break. Unfortunately, the mass migration of American workers to teleconferencing and the mass furloughs and layoffs that many companies were forced to enacted left Quibi without a key demographic, as consumers, now having much more spare time, flocked to established services such as Netflix.