Launched in April 2020, Quibi has raised about $1.75 billion from major studios and other investors and has banked dozens of original series from Hollywood A-listers. The major question is who, exactly, would be interested in acquiring the struggling Quibi venture, given its untested business model and weak subscriber traction to date.
The possible sale of Quibi comes as it has had a tough time signing up subscribers following its launch six months ago, which came just weeks after the COVID-19 pandemic began sweeping across the U.S.
Among other potential moves it is exploring, Quibi is considering trying to raise even more funding or launching an IPO through a merger with a special purpose acquisition company (SPAC), per the Journal report. A SPAC is a kind of holding company formed solely for the purpose of raising capital through an initial public offering.
Quibi did not confirm or deny the Journal report. A spokeswoman said, “We do not comment on rumor or speculation.”
In a statement, the company said, “Quibi has successfully launched a new business and pioneered a new form of storytelling and state-of-the-art platform. “Jeffrey [Katzenberg] and [CEO] Meg [Whitman] are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees.”
Investors in Quibi include Disney, NBCUniversal, Sony Pictures Entertainment, Viacom, AT&T’s WarnerMedia, Lionsgate, MGM, ITV and Entertainment One (now part of Hasbro). Tech investors include China’s Alibaba Group. Katzenberg’s WndrCo investment vehicle also is a Quibi investor.
Katzenberg, the one-time movie mogul who headed DreamWorks Animation before selling it to Comcast, has blamed the coronavirus pandemic for Quibi’s lower-than-expected uptake. At an industry conference in June, he said, “I’m still quite optimistic this is gonna work.”
Quibi has paid for high-budget original shows, broken into episodes of about 10 minutes apiece, from the likes of Steven Spielberg, Jennifer Lopez, Sam Raimi, Idris Elba, Chrissy Teigen, Antoine Fuqua, Lena Waithe, Anna Kendrick, Rachel Brosnahan, Issa Rae, Kevin Hart, Steven Soderbergh and the Kardashians. At the Creative Arts Emmy Awards last week, Quibi picked up its first Emmys for Antoine Fuqua’s “#FreeRayshawn,” with Laurence Fishburne and Jasmine Cephas Jones taking home the acting trophies in the short-form category.
Still, Quibi has fallen short of its business plan. The company was on a trajectory to sign up fewer than 2 million customers in the first year of operation — just 30% of its original target, the Journal reported in June. Quibi has disputed the figures as inaccurate but hasn’t disclosed its own subscriber figures. The Quibi (“quick bites”) service costs $4.99/month with ads and $7.99/month without.
A big issue for Quibi is that it debuted as a mobile-only service, frustrating users who wanted to watch the cinematic shows on TVs. The company has since added the ability to “cast” streams from Apple iOS and Android mobile apps.
More broadly, Quibi faces competition from much larger subscription-streaming players like Netflix and Disney — despite Quibi execs insisting they’re catering to a different market segment, a theoretical audience of millennial smartphone users who want “quick bite,” on-the-go entertainment. But in the mobile-video space, Quibi is fighting for attention against a torrent of free short-form video available on apps like TikTok, Snapchat, Instagram and YouTube.
Meanwhile, Quibi is the target of a lawsuit filed by interactive-video company Eko, which accuses Quibi of misappropriating trade secrets and infringing two patents. The dispute centers on Quibi’s Turnstyle feature, which determines the orientation of a viewer’s phone (either horizontal or vertical) and presents content in the appropriate mode. Quibi is fighting Eko’s lawsuit, which it has called baseless. The legal action is being funded by activist hedge fund Elliott Management, which took a stake in Eko.
Earlier this summer, Quibi denied a report that it was planning to make layoffs.
At the Primetime Emmy Awards on Sunday, host Jimmy Kimmel roasted Quibi, calling it “the dumbest thing to ever cost a billion dollars.”
Pictured above: Meg Whitman, Jeffrey Katzenberg