INNOVATION
Quibi: Quick Bites of Disruption
Another player in the streaming business.
Do you frequently engage with your phone? And do you enjoy watching short videos? Well, Quibi knows the answers to both of these questions and they have the solution.
Quibi is is a premium subscription video streaming service led by Jeffrey Katzenberg and Meg Whitman launched on April 6, 2020. So it is new. News, reality TV, comedies, and original movies edited into quick bites of 10 minutes or less, optimized for viewing on phones.
Simply put it is Netflix, but shorter, on the phone.
Maybe you have seen one of their advertisements. They have been doing some pretty strong marketing to meet with their prospective customers. They have aired even during the Super Bowl and the Oscars. I can only imagine their marketing budget. Or not.
In a Nutshell
The company has been founded in 2018 and has raised $1.75 billion from major Hollywood studios like The Walt Disney Company, WarnerMedia, Sony Pictures and NBCUniversal. They are the championship team of creative work. Of course, the names Katzenberg and Whitman probably had a major effect on the capital raised. Both proven individuals, they know what they are doing. A senior executive at one of Hollywood’s major talent agencies said: “If you had blindly bet on Jeffrey Katzenberg for the past 30 years, you’d have made a lot of money.” Considering I make mistakes frequently, he must be the god. The same goes for Whitman who managed global companies one after another.
In the end, it is not only the idea but the people behind the idea that helps the company thrive. For Quibi, these happen to be extraordinary people: Meg Whitman and Jeffrey Katzenberg.
Meg Whitman
Meg is Forbes’s number 2 for America’s Self-Made Women 2019. She was the president and CEO of eBay (1998–2008) and increased the annual revenue from $4 million to $8 billion. Read it again if you should, it is from millions to billions. She was the CEO of Hewlett Packard Enterprise (2015–2018) later on. If I were to mention all the companies she did amazing things, I would need separate writing. Just to name a few, she was the vice president at Bain & Co, senior vice president Walt Disney Company, sits on the boards of Procter & Gamble and Dropbox. What else she needs to do to prove that she knows what she is doing?
When Katzenberg pitched his idea to her, she said “You know what? I think I have another startup in me.” Let alone saying this, I hope I can see the days when I am 64. It is amazing to see examples such as her, leading the way. I am excited to see what she is onto.
Jeffrey Katzenberg
Jeffrey was the co-founder and CEO of DreamWorks Animation. He successfully built and grew the company into a creative giant. Moreover, he was the former Studio Chairman of Walt Disney Company, helping the company transform into a multibillion-dollar empire. He is known for the highly profitable animation features he produced The Little Mermaid, Aladdin, Beauty and the Beast, and The Lion King. He sure knows how to create original content.
The Dynamics
Whitman and Katzenberg describe themselves as opposites. She is the left-brained, analytically-minded executive, and he is the right-brained, creative type. They believe that their diverse points of view are what give them their “superpower”.
When asked how the idea for Quibi came up, they said:
“We’re pioneering into a space that only exists because of two things: YouTube, and Steve Jobs and the iPhone.”
Those are three things, but, who counts?
Built for the Millennials
I think the company has built a strong foundation with its insights for today’s market and today’s consumers. They seem to have done their research well.
Quibi differs its understanding of the new generation that makes up the majority of the customer base of streaming services. Their target audience is people aged between 25 to 35 or in other words, the doomed millennials. That would be the phone-glued generation who have a relatively short attention span. Due to massive amounts of information, this generation is forced to switch their concentration from one task to another. As a solution, Quibi offers videos in 10 minutes or less, just what is needed for them.
More importantly, Whitman realized idle time spent frequently and said to Los Angeles Times, “During the day most people don’t have an hour to sit and watch something on TV”. Rather, we have a lot of slack time while we give breaks, commute or wait in a line. This time directly goes into checking social media, yes Instagrammers, I am talking to you.
Katzenberg says after research, they found out that people spend 60 to 70 minutes on YouTube, Facebook, Instagram, and Snapchat while they kill their spare time. They want to have a bite from that time. That is why the service of Quibi is exclusively about “what people do from 7 a.m. to 7 p.m. on their phone”. They want to let people enjoy a 10 minute video while the guy in the front continues to order his non-ending fancy Starbucks order. It takes about that long, right?
Streaming Wars
Giant corporations are taking big financial risks, powerful creators are signing never-ending deals, and the streaming wars heat up. The competitors are plenty from on-demand platforms like Netflix and Amazon Video to offerings like YouTube TV and Apple TV+. There are many other players as well including Hulu, Disney+, HBO Max, or Peacock. Users have more available choices everyday and they know it.
Quibi executives said they don’t view Netflix and other streaming services as their competitor. That might sound strange. Yes, their business model is slightly different but as a streaming service, they compete for screen time. So they are in competition. To add, it competes directly with free services including the 500+ hours of content that is uploaded on YouTube every minute.
Apart from the annoying ads that pop up on my screen and driving me mad, I am content with the service. Because it is free. However, it is hard to distinguish what is worthy among the junk videos. So that is where Quibi might prove valuable.
As the size of the market is only increasing, there are only more customers to capture. It is not hard to believe since the new generations are growing up attached to screens. That allows many companies to profit from the booming industry regardless of the fierce competition. The challenge now is how to make streaming a profitable business at an eventual steady state.
Opposition
TechCrunch’s Josh Constine thinks differently. While he appreciates that Quibi is doing something audaciously different than most startups, he thinks the company misses every trend and tactic that could help make its app popular. He thinks it is antisocial that the platform does not connect us with friends, unlike the company TikTok that inspires the user to spread the content and take on it to friends. The question I ask is do we feel the need to share every video we enjoy with our friends? I don’t think we do. When I watch something great on Netflix, I don’t feel the need to send something to my friends, I can just enjoy the content. If I want to spread the word, I can merely talk about it on the phone just like I did with the last season of La Casa de Papel. After all, aren’t we social enough with all the apps that surround us?
Another issue raised is whether people will pay for another video streaming. That is a good question and it is the underlying assumption Whitman and Katzenberg built the company on. Although the pricing might change depending on the market response, they are confident that people will eventually pay for high-quality and convenient streaming service. I am not so sure because there are plenty of those available today.
Current Situation
I believe the co-founders probably didn’t take into account the lockdown the coronavirus caused. None of us have. Due to the pandemic, nobody is commuting or waiting in a coffee line anymore. This was what the company has been built on, remember? It was thought to be the go-to service when someone had some time to kill let it be waiting in a line or riding a train. Quibi’s core demographic is at home, working online though. It is not a problem according to Whitman and Katzenberg. They still think that there are plenty of “in-between moments” to snack on Quibi videos here and there in quarantine. But is there, especially when big screens are available to fulfill our needs?
Netflix, HBO, and Disney are all profiting from the lockdown and increasing their profits tremendously. Netflix announced to have gained 16 million new subscribers only in the first quarter due to lockdown. Are we sure they didn’t cause the virus?
What about Quibi that has been released on 6 April? It was downloaded only 300K times. To compare, Disney Plus drew 4 million downloads on its first day. Only on its first day. People already started doubting the future of the company. But people always talk and criticize unless success leaves them speechless. That does not prove value, testing the product in the market does and that is what Quibi is doing today. Yes, the company did not see a good start, but that solely does not determine its future. Plus, the lockdown will not go on forever, some countries are even going back to normal. Either way, to increase interaction with the customers, the service is free for the first 90 days. Maybe you will like it or forget to cancel.
Time will tell if the company will be successful in disrupting the streaming business. Katzenberg says,
“Five years from now, we want to come back to this stage and if we were successful, there will have been the era of movies, the era of television and the era of Quibi.”
