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After reading AdExchanger's piece , Can Quibi Live Up To Its $1.75 Billion Valuation? here's how we see it.
SUMMARY: Quibi, the soon-to-be-launched, short-form mobile video, ad-supported, subscription app, has raised another $750M in funding, bringing it's total investment to $1.75B. The names of the investors and the valuation of the company has not been disclosed. Quibi was founded by former DreamWorks CEO Jeffrey Katzenberg and former HP CEO Meg Whitman. Quibi will launch in early April, and will offer two subscription tiers: $4.99/month for ad-supported and $7.99/month for ad-free. The service gives users 'quick bite' (hence the name "Qui-bi"), episodic, video content. Shows fall into one of three categories: 'Movies in Chapters', 'Unscripted', and 'Docs', and all episodes are no longer than 10 minutes each. Stars like Liam Hemsworth, Reese Witherspoon, and Chrissy Teigen will have original shows on Quibi.
In order to get traction, Quibi is spending a lot of money on paid advertising. They ran a 30 second spot during the Superbowl this year. On the flip side, they already have ad spend commitments from major brands like Pepsi and Walmart.
Quibi is entering an extremely competitive streaming video market, against free services like YouTube and IGTV and paid services like Hulu, Disney+, Netflix, and more. They have their work cut out for them.
OPINION: So if this is the first time you've heard of Quibi, don't feel like you're on an island. Maybe you were living under a rock, but so were we. And if you know all about Quibi and are judging us right now, quit being so judgy. We didn't watch the Superbowl commercials this year, okay?
Can Quibi create sticky, buzzy enough content that becomes 'must-watch'? Will the content be high quality, award-worthy, addictive in nature? That is the make-or-break question. Clearly, investors are betting they can, likely (and only) because of Jeffrey Katzenberg's glowing track record from his career at Paramount, Disney, and as founder of DreamWorks.
What makes this proposition a bit more tricky, however, is the crowded market that Quibi is entering into. You can have great content, but if you are charging consumers for a subscription service and they have already racked up monthly fees for Netflix, Hulu, Disney+, NBA League Pass, and 5 others, will they be willing to tack on another?
Many consumers are probably getting to the point where the content truly has to be GREAT and DIFFERENTIATED for them to sign up, let alone to pay. What makes this even harder is that Quibi is not showing up to the streaming wars with any brand recognition or well-known content. And sure, they have a lot of cash to throw at those problems, but most of their competitors (i.e. Disney, NBCUniversal, ViacomCBS, etc.) have more.
There is a world in which Quibi puts out great content, but isn't able to get enough traction with an exclusive subscription app to make the math work, so they decide that licensing out their content to other streaming providers makes more business sense. Right now we're seeing a proliferation of new streaming services. Over time, consumers will decide what to prioritize and what gets cut. As a result, many of these services will shut down in favor of licensing their content to other services, and eventually, only a few will be left standing. It's hard to see a service like Quibi, that is somewhat late to the game, and is seemingly a one-trick pony, be one of those left standing.
With that said, good luck Quibi, may you bring a new source of premium video ad inventory to this industry!
Shiv Gupta is the Founder of U of Digital. Shiv is a former digital marketing executive of 11+ years, with time spent in operations and sales leadership at major adtech and media companies. Most recently, he was VP of Sales at Criteo. He's also a proud son, husband, and Dad!