Show an ad over header. AMP

Quibi says it's shutting down

Quibi, the mobile-only video subscription streaming service, is shutting down, the company announced Wednesday. The company said the decision was made to preserve shareholder equity.

Why it matters: Quibi had struggled to hit its subscriber growth targets amid the global pandemic. The app launched six months ago.


Details: In a letter to stakeholders, Quibi said it intended to wind down its business operations and initiate a process to sell its assets over the next few months.

  • "Following the Company’s wind down and satisfaction of all liabilities, the remaining funds will be returned to its investors as specified in the Company’s operating agreement," the letter said.
  • The company noted that its board made the decision to shutter after exploring several strategic and financial options. (Reports previously suggested that the company was considering a full sale but failed to find a buyer.)
  • Quibi says app subscribers will receive separate notifications regarding the final date of access to the platform.

The company blamed its woes on changes to the industry landscape and ongoing challenges. "[I]t was clear that the business would not be able to continue operating for the long-term on a standalone basis," the letter said.

By the numbers: The company raised a whopping $1.75 billion to get the app off the ground from Alibaba, as well as Hollywood behemoths like Walt Disney Company, NBCUniversal and AT&T's WarnerMedia.

  • CEO Meg Whitman said in a statement that while the company had enough capital to continue operating for a significant period of time, "we made the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our talented colleagues with grace.”

Earlier on Wednesday, The Wall Street Journal reported that Katzenberg would be informing the board of the move.

  • The company hired a restructuring firm to evaluate its options in recent weeks, per The Journal. One of the recommendations was to close operations.
  • The Information reported on Tuesday that strategy meetings have recently been been cancelled.

The big picture: The app, which launched in April, struggled to attract subscribers amid a streaming boom during the COVID-19 pandemic.

  • Third-party analytics companies reported over the summer that the app only attracted a few million downloads. The company never officially confirmed any paid subscriber numbers, but Katzenberg told The New York Times in May that it saw 3.5 million downloads. Other analytics companies reported that Quibi struggled to convert most of its free trial subscribers to paid subscribers.
  • It also faced a heated patent lawsuit funded by a powerful activist investor over what it considered its flagship technology.
  • Quibi was created to provide short-form video to young users via mobile. Most videos were 7 to 10 minutes in length, but shot both vertically and horizontally. In recent months the company had been experimenting with putting some of that programming on TV screens.

Between the lines: The company's business model was contingent on having enough subscribers and eyeballs on its content to sell lucrative ads — a similar model to the video subscription streaming service Hulu.

  • Axios reported in March that the company sold out its first year in ads — $150 million in revenue — ahead of its April 6 launch. That number is fixed via pre-sold ad agreements with 10 companies.
  • Ad partners include big-name marketers like Progressive, Discover, General Mills, Procter & Gamble, AB InBev, Taco Bell, Pepsi, T-Mobile, Google and Walmart.
  • Prior to the service launching, Quibi CEO Meg Whitman told Axios in an interview that she expected the majority of subscribers to chose Quibi's ad-supported plan.

Our thought bubble: Quibi argued that months of stay-at-home lockdowns pushed consumers to TV streaming services and away from mobile-only video. But TikTok, a Chinese-owned short-form video app that's mobile-only, has gained massive traction in that same time, even while facing major regulatory headwinds.

  • Quibi's problem was that it raised a lot of money and couldn't live up to the hype. Its programming never produced any smash hits. And consumers never really embraced its "turnstyle" format, that it billed as revolutionary.

What's next: Whitman says the company will work to find a buyer for its assets in the next few months. “We continue to believe that there is an attractive market for premium, short-form content," she said.

Jeffrey Katzenberg is an investor in Axios.

Trump applies extreme pressure on Bill Barr to release so-called Durham Report

President Trump and his allies are piling extreme pressure on Attorney General Bill Barr to release a report that Trump believes could hurt perceived Obama-era enemies — and view Barr's designation of John Durham as special counsel as a stall tactic, sources familiar with the conversations tell Axios.

Why it matters: Speculation over Barr's fate grew on Tuesday, with just 49 days remaining in Trump's presidency, after Barr gave an interview to the Associated Press in which he said the Justice Department has not uncovered evidence of widespread fraud that could change the election's outcome.

Keep reading... Show less

CDC to cut guidance on quarantine period for coronavirus exposure

The CDC will soon shorten its guidance for quarantine periods following exposure to COVID-19, AP reported Tuesday and Axios can confirm.

Why it matters: Quarantine helps prevent the spread of the coronavirus, which can occur before a person knows they're sick or if they're infected without feeling any symptoms. The current recommended period to stay home if exposed to the virus is 14 days. The CDC plans to amend this to 10 days or seven with a negative test, an official told Axios.

  • The CDC did not immediately respond to a request for comment.

CDC panel: COVID vaccines should go to health workers, long-term care residents first

Health-care workers and nursing home residents should be at the front of the line to get coronavirus vaccines in the United States once they’re cleared and available for public use, an independent CDC panel recommended in a 13-1 emergency vote on Tuesday, per CNBC.

Why it matters: Recent developments in COVID-19 vaccines have accelerated the timeline for distribution as vaccines developed by Pfizer and Moderna undergo the federal approval process. States are preparing to begin distributing as soon as two weeks from now.

Keep reading... Show less

Obama: Broad slogans like "defund the police" lose people

Former President Barack Obama told Peter Hamby on the Snapchat original political show "Good Luck America" that "snappy" slogans such as "defund the police" can alienate people, making the statements less effective than intended.

What he's saying: "You lost a big audience the minute you say it, which makes it a lot less likely that you're actually going to get the changes you want done," Obama told Hamby in an interview that will air Wednesday morning at 6 a.m. EST on Snapchat.

Keep reading... Show less

Nasdaq's ultimatum to America's most powerful corporations

New diversity and inclusion rules are on the table for some of America's most powerful corporations, courtesy of one of its most powerful stock exchanges.

What's new: Nasdaq is threatening to delist companies that won't move toward having at least one woman and at least one underrepresented minority of LGBTQ person on their corporate boards.

Keep reading... Show less

Latinos make up nearly 18% of the U.S. labor force but occupy just 4% of executive roles

Latino professionals have the widest gap between representation in the labor force and executive positions — bigger than that of any other minority group.

Why it matters: Latinos will make up a quarter of the U.S. population by 2050, and scores of U.S. firms profit off of Latino consumers, but this group is absent from the business world's highest and most impactful decision-making positions.

Keep reading... Show less

Salesforce will buy Slack for $28 billion

Salesforce on Tuesday afternoon said it will pay $27.7 billion in cash and stock to buy workplace collaboration platform Slack.

Why it matters: This is the largest software merger since IBM agreed to buy Red Hat in late 2018, and creates a cloud giant that can better compete with Microsoft.

Go deeper: Salesforce rolls the dice on Slack

McConnell circulates revised GOP coronavirus stimulus plan

Senate Majority Leader Mitch McConnell circulated a new framework for coronavirus stimulus legislation to Republican members on Tuesday that would establish a fresh round of funding for the small business Paycheck Protection Program and implement widespread liability protections, according to a copy of the plan obtained by Axios.

Driving the news: The revised GOP relief draft comes after McConnell's meeting with House Majority Leader Kevin McCarthy, Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows, during which they went over in detail what provisions would get backing from President Trump.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories