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State of the Screens

Slow Start Means Quick End For Quibi

By October 29, 2020No Comments

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

Video: Quibi CEO: Shutting down operations was most honorable choice for shareholders

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.

Podcast: Jason Hirschhorn on Quibi’s death and what comes next

More #1: An open letter from Quibi

More #2: “A Bottomless Need to Win”: How Quibi’s Implosion Shapes Katzenberg’s Legacy and Future

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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