Quibi’s crash-and-burn trajectory is certainly enough to leave marketers skittish. Brands have been eager to jump into a streaming ecosystem that is exploding with new media properties like NBCUniversal’s Peacock and WarnerMedia’s HBO Max. Brands are looking for sponsorship deals like the ones Quibi offered, giving them greater access and input into how advertising lives on these platforms. These deals, of course, often come with a higher price tag.
One marketing executive, who was approached early on about a deal with Quibi, says, “They pitched us hard and we determined early on that it was way overpriced,” adding that, “their audience and impressions estimates were really high and not realistic. We felt in order for them to hit that guarantee we would have to run a spot every 10 minutes.”
Moving forward, Quibi’s demise—the first casualty in the streaming wars—could call into question this model, and push brands to strike deals with media companies that can offer makegoods elsewhere in their portfolios. The more-stable media companies, with legacy businesses and TV networks, might offer more flexibility, where they could steer brands if one startup property stumbles. Quibi did not provide that kind of safety net, according to one media buyer.
This comes as mega-media companies like WarnerMedia, Walt Disney and ViacomCBS reorganize themselves to put streaming at the center of their businesses.
“In a strange way, it sort of validates the success of other launches like Peacock and Disney+, that it isn’t a given that if you launch a streaming service it will be a success,” says David Campanelli, chief investment officer, Horizon Media. “But also it reinforces the thinking that viewers want to watch high-quality, premium content in their living rooms on their TV set. They want the ability to take that content on the move as well. But, given a choice, shorter-form, more-disposable content is what works in those in-between moments Quibi was trying to capture, and premium content works best in long form on a TV set.”
It will certainly be interesting to see how Quibi’s failure plays out in the marketplace as WarnerMedia introduces ads on HBO Max next year and Discovery goes out to advertisers with its own streaming service.
WarnerMedia is opening up inventory for HBO Max to the entire marketplace, according to multiple media buyers, instead of going the route of exclusive sponsorships, as Quibi and NBCU’s Peacock have done. Discovery, on the other hand, is looking for exclusive initial sponsors, according to buyers.
Quibi announced on Thursday it intends to wind down its business operations and initiate a process to sell its assets. Following the wind down and satisfaction of all liabilities, any remaining funds will be returned to its investors.
“While we have 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,” Whitman said in the statement. “We continue to believe that there is an attractive market for premium, short-form content. Over the coming months we will be working hard to find buyers for these valuable assets who can leverage them to their full potential.”
Quibi subscribers will receive separate notifications regarding the final date of access to the platform. It did not provide details on what happens with ad deals.
“Quibi has been a strong partner with a unique mobile-first vision, and we’re sorry to hear they will be winding down operations. Obviously, we will continue to monitor and ensure our customers with Quibi on Us are supported during this period and through any next steps needed,” a T-Mobile spokeswoman said in a statement.
Quibi launched out of the gate with 1.7 million downloads in a week, offering free trials in the hopes of converting paid subscribers. It offered two tiers of service, a $4.99 plan with ads and a $7.99 plan without. The company has never disclosed its active audience numbers officially, but there are indications that it had a hard time retaining viewers.
Quibi had forecast 7.4 million subscribers by the end of the year but, as of this week, only 500,000 had signed up, according to the Wall Street Journal, which first broke the news.
Antenna, a third-party analytics company, reported that 27% of Quibi's first batch of viewers, who received a 90-day free trial, converted to paying subscribers. Quibi has also fallen down the app rankings on Apple and Google devices, which measure daily downloads and give a sense of how many new users are trying the app, over the past few months. In October, on Apple devices, Quibi went from being a top-100 overall U.S. app in the App Store to No. 285 as of Tuesday, according to App Annie, an app analytics firm. Quibi is No. 19 on Apple for U.S. entertainment-based apps, according to App Annie.
In an effort to pivot during the pandemic, Quibi sped up its plans to stream shows to TV sets as more people were watching content at home versus on mobile devices. It also started distributing shows on other sites like YouTube to help drive sign-ups. It even screened its original “The Stranger” at a drive-in movie theater.
Brands were wooed by Quibi’s initial promise and the starpower it boasted; its roster of celebrities creating shows included Reese Witherspoon, Chance the Rapper, Anna Kendrick, Kevin Hart and Liam Hemsworth.
And while the shows were slow to catch on with viewers, it had become a hit with critics. Quibi picked up two Emmy Awards for police drama “FreeRayShawn,” along with 8 other nominations for short-form programming. And “I Promise” won best short-form series at the African American Film Critics Association.
In recent months, advertising executives and some of the brand partners have said they were working with the company to address some of its shortcomings and find a way to recoup some of the value on their investments. Those negotiations talked about items like giving the advertisers ad space in Quibi’s second year of operation.
Some brands looked at the experimental ad deals as simply the cost of doing business and knew it was always a risky bet. A marketing lead at one of the brands told Ad Age that it was a “learning experience,” and a way to try out new tech like Quibi’s rotating “turnstile” ads, which offered a way to produce ads that appeared in full screen no matter the direction a user turned their phone.
Those ads were also expensive and laborious to produce, and another hurdle to doing business with Quibi.
Contributing: E.J. Schultz
