Veterans Ready to Launch Netflix for Mobile

In April this year a ‘startup’ with over a $1bn in funding will launch in the US, with a leadership team blending Meg Whitman’s tech and business experience and Jeffrey Katzenberg’s origins in the creative side of old Hollywood.

Short for “Quick Bites” and pronounced to rhyme with ‘hippy’, Quibi is Jeffrey Katzenberg and Meg Whitman’s new venture, entering the streaming entertainment market so recently dominated by Netflix.

With the Disney+ launch receiving a boost from The Mandalorian, Apple+ and HBO Max setting out their stall, WarnerMedia’s streaming platform entering Beta, and NBC Universal’s Peacock also opening for business in April this year, this is a buzzing marketplace.

Leadership

A new venture from Katzenberg and Meg Whitman is a big deal.

Whitman grew eBay from 30 employees and revenues of approximately $4 million, to approximately 15,000 employees and $8 billion in annual revenue. Her time legacy at Hewlett Packard is more controversial, but she is credited by Fortune with turning that business around, in challenging circumstances.

Katzenberg cut his creative teeth in the 1970s at Paramount, where he worked on the revival of the Star Trek franchise. At Disney, he focused on broad appeal comedies like Good Morning, Vietnam and Three Men and a Baby, and on turning around the core animation division, with The Little Mermaid, Beauty and the Beast, and Lion King. And at Dreamworks SKG, his focus on the transition from traditional techniques to 3D computer animation, led to the film Shrek winning the first Academy award for an animated feature. The animation division of DreamworksSKG was spun out, listed, and eventually acquired in 2016 by NBC Universal for $3.8 billion.

Market Focus

Quibi’s distinctive focus is on ‘making mobile moments extraordinary’, by delivering quality films and television shows in short chapters that can be quickly watched on the go. The films are edited to be viewable both horizontally and vertically.

The service is aimed at 25 to 35 year olds, in the time they spend between 7am and 7pm watching short form entertainment. The platform plans to offer subscriptions for $4.99 a month, or $7.99 without.

Culture

As Deadline reported, although Quibi is based on Los Angeles, it’s talent are from tech and creative, with an emphasis on those Snap, Pandora, Spotify and Google.

Funding

Quibi’s backers include BBC Studios, Disney, NBCUniversal, WarnerMedia, Viacom, Sony, Alibaba Group and Goldman Sachs.

Advertising Sales

Last October the company announced it had sold out in advance its entire first year’s inventory of advertising slots. Companies including Procter & Gamble, Walmart, Taco Bell and Google, are being drawn away from Youtube, by the promise that their shows and brands will not be tarnished by being seen alongside images deemed inappropriate.

Investment Model

The business has an innovative model for investing in film and TV shows. Quibi will own its bite-size shows and film exclusively for two years. After this, the creators will have the right to re-cut and exploit their films as long form entertainment. Director Antoine Fuqua (Training Day) is creating a two-and-a-half hour drama, #Freerayshawn whose 150 minutes will be screened first in fifteen ten minute segments. Steven Spielberg is working on a horror anthology which can only be watched after dark.

Partnerships

Quibi has a partnership with T-Mobile that will include Quibi as part of the mobile phone company’s offering to customers. T-Mobile President and Chief Operating Officer Mike Sievert said customers will learn about Quibi through T-Mobile’s app, its retail reps at its stores and through its thank you program, T-Mobile Tuesdays.

Risks

What could go wrong?

Commentators have highlighted that others, including Verizon’s go90 platform, have tried to target mobile users with premium entertainment, and failed.

Specific concerns include:

Competition from free mobile-focused streaming services.
Whether the younger target demographic will pay for short form entertainment, particularly with so many other options
The decision to offer a two tier choice of subscriptions, but no free option, limiting Quibi;s ability to add users quickly
The relatively short period Quibi will own its shows, and relatedly, the cost of maintaining a critical mass of new shows and films.

Ego

Katzenberg’s tenure at Disney ended when he resigned amidst reports that he was taking too much credit for the successes in its Animated Feature division.

Optimism

Film studios have prospered where financial discipline and creative talent blend, whether in an individual, or frequently in a leadership dream team.

Quibi brings the added interaction between creative and tech cultures.

Perhaps the seeds of Quibi’s success or failure lie in how its founders blend the best of their backgrounds. As a Vanity Profile piece noted, ‘she the buttoned-down, left-brained, analytically-minded exec, he the right-brained, shoot-from-the-hip instinct guy, might be what give them a leg up, their “superpower,”’.