Oh, Quibi. My dear, Quibi. Things aren’t looking so good, huh? With a decent, if not muted, debut during a pandemic and a marketing campaign that seems to have been, uh, not great, it appears that the fledgling streaming service is falling on hard times. And according to a new report from the Wall Street Journal, times are just hard, but they’re pretty dire.
The full report is a fascinating read, diving deep into the behind-the-scenes drama of the company, specifically with its two leaders, founder Jeffrey Katzenberg and CEO Meg Whitman. But honestly, the statistics that are mentioned in the report really do paint the picture of a really noble effort to disrupt the streaming industry with mobile-first, bite-sized content that has failed to attract any attention outside of people like me that are paid to know about such things.
One of the most damning signs of the streaming platform’s first-year failures pointed out in the new report is the claim that Quibi will likely only gain 2 million paying subscribers after its first year, well below the anticipated 7.4 million that was the goal. However, to be fair, any projection of 12-month growth is really difficult after only a month or so of data. Granted, the first month data is…uh, bad.
But regardless of how slowly the growth is happening, it appears that the most startling issue that faces the start-up streaming service is the cash flow. Or to put it more accurately, the cash hemorrhaging.
According to the report, Quibi earned more than $1.75 billion in pre-launch investments. That’s a huge number for any start-up, let alone a media streaming company with attempting to carve out a new niche is a distribution segment that seems pretty damn crowded to begin with. And the money has already been put into use to attract major celebrities, filmmakers, and actors, with the hope that top names will drive subscriptions.
However, as we’ve already noted, that isn’t the case. But at least Quibi has all that money, right? Well, not so much…WSJ is reporting that the company will likely spend $1 billion by the third quarter of 2020. That’s right—one billion dollars. Oh, and to make matters more damning, the company is said to be currently seeking $200 million in additional financing.
So, when you ask your friends or family if they’re going to subscribe to Quibi and their confused response is, “Quibi? What’s a Quibi?” that’s the $1 billion of marketing, production, tech costs, and all other expenses paying off. Ouch.
Now, it may seem as if there’s all bad news for Quibi, but that’s not completely the case. Sure, the financials seem surprisingly bad, given the amount of cash the company started with, but at the end of the day, content rules everything, right? That’s what Netflix has taught the entertainment industry. “If you build it, they will come,” as they say. And though Quibi doesn’t have that “Stranger Things,” “House of Cards,” “Orange is the New Black”-type series to garner watercooler discussion, there is some decent content on there. So, it could all change if Quibi is able to find that one program to finally break through.
In the meantime, there’s an awful lot of money leaving with not a lot coming in. And you don’t need a business degree to know what happens next.