What is Quibi?
For those that don’t already know, Quibi is the latest entrant to the streaming wars, and describes itself as a place to watch movie-quality shows designed for your phone, with new episodes daily. Their whole shtick is that it is highly produced content which can be consumed whilst you’re waiting for the bus in quick bites (get it? Quibi…Quick Bites? I wish i made that up but that’s what it actually stands for…)
What they do have on their side is two highly successful executives and a boat load of money. Meg Whitman, former CEO of eBay and Jeffrey Katzenberg, the guy who made all of your favourite Disney and Dreamworks films. Oh, and $1.75 billion raised in funding which has allowed them to attract on screen talent such as Zac Efron, Idris Elba and Chrissy Teigen. They’ve even convinced Steven Spielberg to direct a film which will be released in 10 minute “chapters” daily. What could possibly go wrong?
So how has the launch gone?
Well, we’re 4 weeks in and all that we’ve heard is that Quibi has managed to get 1.7 million subscribers in the first week. A respectable number until you remember that effectively none of them will be paying a cent for the first 90 days, and it’s yet to be seen how many will continue on as paying customers once the free trial has ended… And we haven’t heard any new numbers since.
One of the things that strikes me about Quibi is how reminiscent of Instagram TV it is. They’re both championing vertical video (although Quibi of course has it’s patented turnstyle technology), so let’s take a look at how the Quibi launch has fared against IGTV on Google trends over the past 24 months to include both launches:
This makes it look like the Quibi launch has gone comparatively well! Of course, I do however doubt that Instagram put hundreds of million of dollars into marketing alone.
Now let’s take a look at how Quibi has fared against the big boys of streaming over the same period:
I suppose it’s lucky that Katzenberg says “We’re competing against free”, because they certainly don’t look like they’re going to be able to compete against Disney+ and Netflix. Unfortunately it looks like they have a battle to find any sort of relevance against the behemoth that is YouTube as well.
The road to Profitability
Quibi got 1.7 million downloads in it’s first week, let’s be generous and say that they keep growing and despite the people who cancel after the 90 day free trial, they settle at an equilibrium of 3 million subscribers.
3 million x 75% x $4.99 = $11,227,500
3 million x 25% x $7.99 = $5,992,500
That adds up to a monthly revenue of a little of 17 million dollars — $17,220,000, or $206.64 Million a year.
Now, we know that Quibi raised $1.7 Billion in funding before they launched, so let’s calculate how many years until they become profitable*
$1.75 billion / $206.64 million = 8.47 Years.
This is of course assuming that Quibi reach 3 million subscribers, and that they don’t raise any more funding; both of which seem pretty likely to me. but it’s still an interesting piece of analysis.
What it boils down to for me is that Quibi need their Baby Yoda or Stranger Things, they need a show to break out and go viral which will inspire people to sign up, without a break out show I can’t see them getting more than 3 million subscribers in the USA.
In fact, I almost think that the thing that Quibi needs is a trashy dating show like Too Hot To Handle, or The Bachelorette. These are highly meme-able shows which will at least draw people in every day to watch new drama unfold.
Oh, and if they’re going to stand any chance of having a break out hit, then as Julia Alexander at the Verge writes, they’re going to need to embrace social media by allowing (maybe even incentivising!) people to screenshot whilst within the app to share online. That’s how shows like Tiger King have really gone viral and driven up subscriptions.
Quibi wouldn’t have launched during a global pandemic unless they were confident they had enough new content to put out in the foreseeable future, but will any of those shows be enough to turn their fortunes around? Tune in tomorrow to find out…
3rd May 2020
Did you see last week’s post?