# Quibi: $1.75 billion on short video that viewers did not pay for

Source: https://sarang.pro/quibi-2020/
Author: Sarang | Published: 14 July 2026

## The situation

On 21 October 2020, about six months after its public launch, Quibi told the world it would shut down. The mobile-only video service had raised $1.75 billion from backers that included Alibaba, Disney, NBCUniversal and AT&T's WarnerMedia. Its chief executive, Meg Whitman, said the board had decided to wind down the business and return cash to shareholders. The company said it was clear the business could not carry on over the long term on a standalone basis.

The gap between plan and outcome was wide. Quibi had told the market to expect more than 7 million subscribers by the end of its first year and roughly $250 million of first-year revenue. A few weeks before the shutdown, according to reports carried by NBC News and CNBC, it had about 500,000 subscribers. Kantar Worldpanel, cited by the Telegraph, counted about 700,000 subscribing households in the third quarter, with one in three planning to cancel. The company never confirmed paid subscriber numbers, according to Axios.

Quibi is a useful case for anyone studying new products, because it had much of what start-ups usually lack: money, famous founders, big-name talent, sold-out advertising and a defined idea. This case asks why that was not enough, and which of the explanations offered by its own founders and by outside observers survive a look at the facts.

## Background

### NewTV and the $1 billion seed round

The company began life as NewTV. In 2018 Variety reported that it had closed a $1 billion seed round, led by Madrone Capital Partners, with backing from Disney, 21st Century Fox, NBCUniversal, Sony Pictures Entertainment, Viacom, WarnerMedia, Lionsgate, MGM, ITV and Entertainment One, plus Alibaba, Goldman Sachs, JPMorgan Chase and Liberty Global. The founder was Jeffrey Katzenberg, a former Disney executive and DreamWorks co-founder, and the chief executive was Meg Whitman, formerly of HP and eBay, as the Telegraph described them.

### The original plan

The plan Variety described in 2018 was a mobile-first subscription service of premium shows of around 10 minutes, scripted and unscripted, with no live television. NewTV said it would license content from studios and would not produce or own shows. It would have two subscription tiers, an ad-free plan and a cheaper plan with light advertising. At the time it had fewer than 10 employees, and it planned to reach 200 to 300 within two to three years. Target launch was the end of 2019.

### Quibi, short for quick bites

The company was later renamed Quibi, short for "quick bites". The final model differed from the first plan: Quibi commissioned original shows rather than only licensing. The Telegraph reported that in its first year of commissioning the company spent $1.1 billion on 175 shows, with each minute of content reportedly costing up to $125,000. Talent included Steven Spielberg, Ridley Scott, Guillermo del Toro, Reese Witherspoon and Jennifer Lopez.

### Advertising presold

On advertising, Quibi did well before launch. TechCrunch reported in October 2019 that it had sold out its $150 million of first-year ad inventory, after booking $100 million by June 2019. Advertisers included Procter & Gamble, PepsiCo, AB InBev, Walmart, Progressive, Google, Discover, General Mills, T-Mobile and Taco Bell. Ads were six, ten or fifteen second pre-roll spots with no skip button.

## The industry

Video streaming was crowded. NBC News listed Netflix and Amazon as large-budget rivals, and said Disney+, HBO Max and Peacock had established catalogues. Disney, NBCUniversal and WarnerMedia were among Quibi's backers, and Disney+, Peacock and HBO Max were among the rivals NBC News named. That gave the company an unusual position: it relied for money, and for some content, on firms that also ran competing services.

Short-form video was the other relevant market. Axios noted that TikTok, a mobile-only short-video app, grew strongly during the same period. The two services were different. TikTok content was free and made by users; Quibi's was paid and commissioned by the company. When asked about the comparison, Katzenberg said, according to The Wrap and The Hollywood Reporter, that it was "like comparing apples to submarines." Whether or not that is right, the comparison shows that viewers in 2020 had many ways to fill a spare five or ten minutes without paying.

The economics of the model were demanding. A subscription service needs customers to pay before they know the content, and a commissioned library needs a hit to create word of mouth. The business was also exposed to patent claims over its rotating-video technology. Axios reported that it faced a patent lawsuit backed by an activist investor.

## The decision

The key decisions came in 2019 and early 2020: what to sell, where to sell it, at what price, and whether to launch when the world changed. The sources describe the choices that were made. The alternatives below are the obvious ones, set out for analysis rather than as documented options.

### Mobile only, or every screen

Quibi launched as a phone app for what Katzenberg called "in-between moments", such as commuting. NBC News reported that stay-at-home orders then left its target audience at home with televisions available, and that the service offered no TV access at launch. Offering TV from the start would have widened the use cases but diluted the mobile idea.

### Free tier or paid only

NBC News noted that Quibi had no free tier and offered only a paid plan with a 90-day free trial. The alternative was an ad-supported free service, which Quibi tried in Australia later, with what the Telegraph called disappointing results. A free tier would have built a bigger audience more quickly and made the pre-sold advertising easier to deliver.

### Launch in April 2020 or delay

TheWrap reported that Katzenberg said the company decided to launch on 1 March 2020. The pandemic was already spreading in the United States. Delaying could have kept the commuter case intact, but would have used cash and held back the pre-sold advertising. Katzenberg told The New York Times in May that the launch timing was regrettable, though he did not regret the decision.

### Sharing and social features

NBC News said users could not take screenshots, which made sharing clips on social media harder, and that the company fixed this later than users wanted. A service built on short clips had little way for viewers to spread what they enjoyed. Social features would have added word of mouth at low cost.

### Wind down, sell or keep going

By autumn 2020 the board faced the last choice. Axios reported that it weighed several strategic and financial options before choosing to close, and that earlier reports said it had tried and failed to find a full buyer. The alternatives were to sell, to raise more money or to keep spending in the hope that subscribers would arrive. Closing early left at least $350 million to return to shareholders. Continuing would have used more of that cash, with no sign in the third-party data that audiences were rising.

## What they did

### 2018 to 2019: building the library and the advertiser base

Quibi raised money, hired Whitman, and commissioned shows. Before launch it had raised $1.75 billion in total, according to CNBC. In January 2020, Katzenberg said the app would offer 175 shows and 35 movies in its first year, plus three hours of original content daily, as TheWrap reported. NBC News reported that it expected to spend about $1 billion by the third quarter of 2020 and to need another $200 million by mid-2021.

### 6 April 2020: launch

The service launched in the United States and Canada. It cost $4.99 a month with ads or $7.99 without, after a 90-day free trial. It included "Turnstyle", a format that switched between vertical and horizontal views as the phone turned. The app peaked at number three on Apple's App Store and dropped out of the top group within a week, according to TheWrap.

### April to May 2020: first numbers and first fixes

Sensor Tower reported 2.9 million downloads, including free trial users. Whitman said 1.75 million users joined in the first week and that downloads were nearer 3.5 million. In the New York Times interview of May 2020, quoted by The Hollywood Reporter, Katzenberg gave 1.3 million active users, said 80 per cent finished episodes they started, and described the numbers as "not close to what we wanted." Quibi was revising revenue projections, cutting marketing, adding casting to bigger screens and building a social sharing feature. He also said: "I attribute everything that has gone wrong to coronavirus. Everything."

### Product changes after launch

Whitman said in April 2020 that engineers were scrambling to build a casting fix for televisions. NBC News reported that AirPlay and Chromecast support came later, and that TV apps arrived just before the shutdown. Katzenberg also said that the events-driven Daily Essentials shows were "not that essential." By mid-May the app ranked 125th in Apple's App Store, after dropping out of the top 50 free iPhone apps, according to The Hollywood Reporter. These fixes arrived after the first impression had formed.

### Summer to October 2020: searching for a way out

Third-party analytics firms reported only a few million downloads over the summer, according to Axios. Quibi hired a restructuring firm, and one recommendation reported by the Wall Street Journal was to close. The Telegraph reported that executives approached Apple, WarnerMedia and Facebook about a sale and found no buyer. The company added television support just before it closed.

### 21 October 2020: wind-down

Quibi said it would wind down, sell its assets and return funds to investors after settling liabilities. CNBC reported that it had at least $350 million in cash and that Whitman expected more to be returned to shareholders after the wind-down. Whitman said at the time, "We continue to believe that there is an attractive market for premium, short-form content."

The case on one page. Free to save and share with credit.

## What happened

### Reach and use

The company's own figures suggested that people who watched often finished what they started: Katzenberg said 80 per cent completed episodes. But he also gave 1.3 million active users out of 3.5 million downloads, and the plan had been for 7 million registered subscribers. The service had many people who tried it on the free trial and few who stayed to pay. Axios noted that analytics firms said many free-trial users did not convert to paid plans.

### Money spent and returned

The company had raised $1.75 billion and spent heavily on content and marketing, while the cash remaining after the announcement was at least $350 million. The sources do not give a final audited figure for losses. The Telegraph's headline figure for first-year commissioning spend was $1.1 billion on 175 shows.

MeasurePlan or claimReported outcome
Subscribers after year oneMore than 7 millionAbout 500,000 weeks before shutdown (reported)
First-year revenueAbout $250 millionNot disclosed in sources
Downloads, first weeksNot stated2.6 million to 3.5 million, depending on source
Raised$1.75 billionAt least $350 million left in cash at shutdown

### Founders' own assessment

By late October the founders went further than blaming the virus. Katzenberg said that simply blaming Covid was not fair. He said: "We asked people to pay for it before they actually understood what it was." Whitman and Katzenberg also said that product-market fit was wrong, as reported by CNBC. He said the concept was less than perfect, a failing he said the company owned, and that failure came from the combination of that and the environment.

### The content

The Telegraph reported that Quibi won two Emmy awards, including for the police drama #FreeRayshawn. Axios argued that it never produced a hit show, and NBC News said none of its shows became the must-have title that would attract subscribers. The Telegraph also quoted Enders Analysis saying that there was no proof of demand for premium short video.

### The library after shutdown

Variety reported in January 2021 that Roku acquired the rights to more than 75 Quibi shows, representing several hundred hours. They would be free on the Roku Channel in the United States, Canada and the United Kingdom, under a seven-year licence. Roku did not disclose the price. Producers could recut episodes into films for other platforms two years after the premiere. The Quibi app itself went offline in December 2020.

## Other views

### Founders: the pandemic

Katzenberg's first explanation was the coronavirus. The commuter case did depend on people being out of the house, and Axios noted that the company blamed lockdowns for pushing viewers toward television streaming. This explanation had force, but he later withdrew it as a full account.

### Analysts: the product

NBC News listed a set of product and timing problems: mobile only, paid only, no sharing, no hit show. Rich Greenfield of LightShed Partners said "The numbers speak for themselves." The Wrap and other trade outlets also wrote about the company's response to the launch, but this case relies only on the pages that were opened.

### Public commentary

The Telegraph recorded that the television host Jimmy Kimmel called the company "the dumbest thing to ever cost a billion dollars." That is a joke, not analysis, but it reflects how quickly the public story turned. The same article noted that Enders Analysis saw no proof of demand for premium short video, which is a more careful way of making the point. Both comments came after the figures were visible; neither shows that the outcome was predictable in 2018.

### Advertisers

The advertisers had bought a first year of inventory. Axios reported that Whitman had expected most subscribers to choose the ad-supported plan. The sources opened do not say what happened to the pre-sold inventory once audiences fell short.

### Limits of the evidence

Quibi was private, so most numbers come from the company's statements, third-party analytics and press reports. The company never confirmed paid subscribers. Download counts differ: Sensor Tower had 2.9 million in one report and 2.6 million for the first month in another, while Quibi gave 3.5 million. Treat all of them as estimates.

## Reading it through a framework

### Jobs to be done

Quibi defined the job as filling the gaps in a mobile day with a high-quality short show. That job assumed idle moments away from home. Once the commute disappeared, the job was still there, but viewers hired other products for it, including TikTok and the television streaming services they already paid for. The case shows the value of testing whether people want the job done in the way offered, and whether they will pay for it, before building the rest.

### Positioning and the value proposition

The promise was premium, short, mobile and paid. Each word narrowed the audience. Premium meant high production costs, which the Telegraph put at up to $125,000 a minute. Short meant that viewers could not easily binge or form a habit. Mobile only meant no use at home on the main screen. Paid meant no free sampling. Katzenberg's comment that people were asked to pay before they understood the product is a statement of a positioning problem: the price came before the proof. The 90-day free trial, at $4.99 a month with ads or $7.99 without, delayed the first payment but did not supply the proof. The reported free-trial conversion problem, mentioned by Axios, suggests that many trial users decided the product was not worth paying for once the trial ended.

## Since then

The wind-down was completed in the months after the October 2020 announcement. The Quibi app went offline in December 2020, and Roku announced in January 2021 that it had acquired the rights to the library and would stream it free during 2021. The sources opened do not describe later results from the Roku deal or the outcome of the patent dispute, so those are left out. In its closing statement the company said it still believed there was an attractive market for premium short-form content.

## What to take from it

- Money and famous names do not replace evidence of demand. Quibi raised $1.75 billion and had advertising pre-sold, but reached perhaps 500,000 subscribers against a 7 million plan.

- A product that asks users to pay before they understand it needs a very clear first impression. Katzenberg said as much after the shutdown.

- An external shock can expose a weak premise, not create it. The founders first blamed the pandemic and later said that was not fair.

- Distribution choices shape the idea. By leaving out television, screenshots and a free tier at launch, Quibi limited how people could find and share the shows.

- A company can wind down early and return cash. At least $350 million remained to go back to investors, a different outcome from running until the money is gone.

## Questions to think about

- If the pandemic had not happened, would Quibi's core problems still have appeared? What evidence would you look for?

- Was selling advertising before launch a strength or a trap for a service that later had too few viewers?

- How should a company decide between licensing content and commissioning its own, as Quibi's plan moved from one to the other?

- What would a cheaper test of the Quibi idea have looked like before spending $1.1 billion on shows?

## Concepts at work

This case draws on product-market fit, customer jobs and value proposition design. Explore them in [Insights](/insights/).

*Written from the public sources listed below. Figures are as those sources report them.*