Slow Start Means Quick End For Quibi

Author

Michael Beach
October 29, 2020

RIP Quibi: The streaming service announced they are shutting down after six months and ≈ $1.4B of cash.

Keep in mind: Others (Go-90, Fullscreen, Vessel, etc.) have failed at premium short-form video as a stand-alone service.

Big question #1: Who were Quibi’s competitors?

Quick answer: Snap, TikTok, Facebook/Instagram, and YouTube are competing for the same time on mobile.

Big question #2: What is different about their business model?

Quick answer: Snap, TikTok, Facebook/Instagram, and YouTube all have business models that focus on advertising. 70% of Quibi’s revenue was supposed to come from monthly subscriptions.

Key details for Quibi advertising/content model:
1) 7-10m per episode
2) $100K/minute average development cost w/ a maximum of $6M/hour
3) 2.5m of advertising per hour
4) $35 CPM for 15s ad
5) 10 15s spots/hour
6) $0.35 in ad revenue/hour

Big question #3: Can an ad-supported model work with premium short-form video?

Quick answer: Depends on how “premium.”  If we assume $6M/hour in content development costs and $0.35/hour in ad revenue, then a show would need 17M hours of view time just to break even!

Just in time: Quibi launched apps on various connected TV platforms two days before announcing the shutdown.

Bottom line: The Quibi team tried something bold, and it did not work out.  Mistakes were made, but far too many people are celebrating failure.  My guess is many positive features from this product will make their way into other offerings soon.

Reply

or to participate.