Quibi, the short-form video app founded by Hollywood mogul Jeffrey Katzenberg, is calling it quits just six months after its launch, according to reports.
The high-profile startup — which raised a whopping $1.75 billion for an ill-fated launch this spring that coincided with the start of the COVID-19 pandemic across the US — is shutting down amid slumping demand for its short-form videos, the Wall Street Journal reported Wednesday.
The shutdown marks a shocking end to Hollywood mogul Katzenberg’s plan to create a new category of entertainment that catered to people on the go. In a bid to create a high-profile library of short videos — most of them just a few minutes long — Katzenberg had lured A-list stars like Jennifer Lopez, Kevin Hart and Nick Jonas.
The Journal said the former Disney exec was informing investors that the company is closing after it recently hired a restructuring firm to evaluate its options.
A Quibi spokeswoman declined to comment.
Reports of Quibi’s closure followed an article on Tuesday from The Information that claimed Katzenberg had tried to sell Quibi’s catalog of programming to companies such as NBCUniversal and Facebook, without any success.
Sources told The Post that Katzenberg has been telling people in Hollywood that he might have to shut down the company. According to The Information, Quibi staffers have been cancelling “important strategy meetings” and have been “informally scheduling goodbye drinks.”
“This is a giant meltdown,” said Eric Schiffer, chief executive of private equity firm The Patriarch Organization. “It is a modern-day Hindenburg within the digital and entertainment arena.”
Schiffer said it is likely that Quibi opts for a so-called “ABC liquidation,” or assignment for the benefit of creditors. Such a liquidation would allow Katzenberg and chief executive officer Meg Whitman to avoid the stench of bankruptcy, and assign Quibi’s assets to a third party. That third party would then sell off the assets and pay off creditors.
Schiffer noted that Quibi’s content library, which includes a courtroom reality show with Chrissy Teigen, called “Chrissy’s Court,” “The Andy Cohen Diaries,” an animated show based on Cohen’s journals and a horror anthology from Sam Raimi called “50 States of Fright,” will likely be sold at “fire sale prices,” “percentages on the dollar.”
News of Quibi’s demise began trickling in last month amid rumors of a strategic review of the company. Hampered by stiff competition from the likes of streaming giants Netflix, Disney+, short-form video apps YouTube and TikTok, Quibi was never able to meaningfully grow its subscriber base. With lower-than-expected viewership, blue chip advertisers like PepsiCo, Walmart and Anheuser Busch, began deferring their payments.
Quibi is also facing a high-stakes lawsuit from rival Eko, which is funded by billionaire backer Paul Singer.
A month into business, Katzenberg blamed the coronavirus for Quibi’s poor start, complaining that the app is meant to be watched via smartphone in on the go situations.
Media critics did not buy that logic, as house-bound customers have more free time to watch shows than ever.
“Suddenly you drop your phone because you’re at home? It’s not logical,” said Schiffer.
Tal Chalozin, the co-founder and chief technology officer of online advertising and tech firm Innovid, said coronavirus lockdowns actually boosted the viewership of services like Netflix, Hulu, Snap and Disney+.
“Viewership is at an all-time high even if ad dollars are limited,” he said, noting that the real problem was that Katzenberg tried to launch a service with an unknown brand and limited content.
With all the well-known rivals already out there, he said that it is “close to impossible” to succeed.
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