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After raising nearly $2 billion in funding and promising to reinvent the way people consume entertainment programming, Quibi is shutting down.
“It is with an incredibly heavy heart that today we are announcing that we are winding down the business and looking to sell its content and technology assets,” Jeffrey Katzenberg and Meg Whitman wrote in a public letter Wednesday. The executives added that they will look to return cash to shareholders, lay off employees as part of the shutdown and look for buyers for its assets.
The note posted not long after the pair, who built the shortform video startup from the ground up, finished informing investors of the move Wednesday, according to a report in the Wall Street Journal, capping off a six-month struggle to attract subscribers to Quibi’s slate of mobile-first shows.
“Our failure was not for lack of trying; we’ve considered and exhausted every option available to us,” they wrote. Katzenberg and Whitman addressed employees — many of whom have been with the company since before it had a formal name (it was called NewTV during the early days of its conception) and helped to build the business from scratch — later in the day during a town hall that was said to get emotional.
A Quibi spokeswoman declined to comment.
Quibi has been evaluating its options for the past several weeks, including a possible sale. That the company is choosing to shut down despite still having hundreds of millions in the bank indicates that Katzenberg and Whitman see few long-term solutions for the business.
Katzenberg had been dreaming up the idea that turned into Quibi for several years. After he sold DreamWorks Animation to NBCUniversal in 2016, he set about putting the pieces in place to launch a mobile-first video business. He tapped Whitman to lead the business as CEO, and together the duo raised $1 billion in funding from a cadre of investors that included every major Hollywood studio.
His plan was to lure subscribers with premium shortform stories that could only be watched on a mobile phone, and he quickly signed on filmmakers including Antoine Fuqua, Sam Raimi, Guillermo del Toro and Catherine Hardwicke to make projects for the service.
Several of Quibi’s projects were nominated for short-form Emmy awards. The Fuqua-produced #FreeRayshawn ultimately took home two trophies in September.
But Quibi’s April launch was derailed by the early days of the novel coronavirus pandemic, which forced people to stay home and made it harder for the company to sell them on paying $5 per month for programming meant to be watched on the go.
The service, which had more than 100 original series, struggled to build up subscribers, coming in well below internal projections, according to a source. According to a report from third-party measurement firm Sensor Tower, Quibi’s mobile app has been downloaded by around 9.6 million users since launch, though not all of those people are necessarily subscribers. Sensor Tower also reports that first-time installs of Quibi in October are down 41 percent from the same period in September.
Still, the shutdown will come as a surprise to many inside and outside the company, which has been conducting business as usual, per one source who has business at the streamer, even as Katzenberg and Whitman explored strategic options.
In their letter, Katzenberg and Whitman suggested two possible reasons for Quibi’s failure: “Because the idea itself wasn’t strong enough to justify a stand-alone streaming service or because of our timing. Unfortunately, we will never know, but we suspect it’s been a combination of the two.”
3:00 p.m. Updated with the letter from Jeffrey Katzenberg and Meg Whitman.
6:42 p.m. Updated with additional information about the town hall.
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