Quibi Shutdown Is More Endemic than Pandemic

Correlation Is Not Causation

The pandemic may be a contributing factor to Quibi’s shutdown, but it is not the root cause. While the tech industry is built on reacting to actual consumer behavior or finding white space, the entertainment industry typically uses advertising dollars and markets its way in. Frequently, there is a disconnect between content and views. Hence, canceled shows, box-office bombs and, well…Quibi. The inability to properly adapt to evolving technology and consumer behavior is endemic to the entertainment industry (Napster, anyone?). Until 2020, the scapegoats for the Industry have been YouTube and Netflix. Now, in spite of millions of Americans at home and on their devices 24/7, the entertainment industry is blaming the pandemic.

Kids Content

The kids demographic was the first to feel the impact of YouTube’s arrival. Disney Channel tried throwing short content onto Disney Channel in an effort to battle YouTube’s growing popularity (ie. As the Bell Rings). Nickelodeon tried adapting Fred from YouTube into a TV series called Marvin the Martian. What works on YouTube and social media doesn’t typically work on TV.

Today, outside of cartoons and “junior” content, neither Disney Channel nor Nick’s numbers are even close to where they were just ten years ago. Channel executives have pointed to YouTube and social networks as the culprit. Meanwhile, neither channel is producing the quality of relatable content that resonated with teens and tweens for over two decades. For at least the past five years, there’s been an obsession with what is happening online to the detriment of content. The channels have turned away endless concepts from creators behind their biggest shows while what each channel is “looking for” remains in constant flux. 

As Gen Z enters its 20’s, we’re seeing more content provider executives shifting their eye from the ball to competing with online-style, short-form content.

Short Form, Big Budget

Quibi entered the market in August 2018 as a content provider with a mission to deliver short-form, scripted content. It quickly raised $2 billion. Only fourteen months later, on October 21, 2020, Jeffrey Katzenberg revealed that the platform was shutting down. Quibi reminds us what Verizon’s Go90 demonstrated a couple of years ago, it takes more than big names and big money. 

Remember when Disney bought Maker Studios for $675 million? Back in 2014, Hollywood tried competing with YouTube by investing in MCNs (Multi-Channel Networks). The entertainment industry dumped boatloads of cash into MCNs that were predictably not going to be successful. The views were just not there to support “Hollywood-levels” of investment. 

The entertainment Industry needs to understand consumer behavior and recognize that it no longer holds a monopoly over video content. The premise that people will watch scripted shows in small bites during work-commutes is a misnomer. Yes, people will watch Shane Dawson or clips from SNL on the way to work. People will not watch a big-budget TV series broken down into 5 to 10 minute chunks on the way to work. 

Perhaps the most important factor (which somehow keeps getting missed by the entertainment Industry) is that nobody wants another service with a monthly fee. The Verge posted an article earlier this year entitled “Quibi Is Flailing Because No One at Quibi Understands What Quibi Is.” Most of the discussion concerns Quibi’s $4.99 (with commercials) and $7.99 (without commercials) price tag as well as the failure to offer a free tier. As a new service, Quibi’s non-commercial had a higher price tag than Disney+ without Disney’s extensive, full length catalog.

Entertainment Industry’s Disconnect

The entertainment Industry continues to struggle with two factors that separate its content from online content, authenticity and the reality that short-form, online content consumption doesn’t translate to scripted, story-driven content consumption. Do you want to spend 2-3 minutes finding a 5 minute, ad-supported episode of a scripted series on your Apple TV, Roku, Quibi app, etc?

Viewers identify with who they watch online largely because of authenticity. They are making a connection with a real person and forming a virtual rapport-of kinds. Viewers can engage with the real person on social media or just keep up with what they’re doing. Alternatively, viewers connect with characters when watching a TV or movie. That takes time, story and great writing to develop. The connection generally cannot be formed in 5 minute bites. It takes time to re-engage each time you turn on an episode, let alone recognize a story arc.

Jeffrey Katzenberg has been behind some of the biggest and most beloved DreamWorks and Disney films of all time. He knows how important story is to a project. Quibi’s content quality is not even an issue that we need need to consider to understand what happened here. Quibi’s disconnect is failing to understand consumer behavior. Content providers as a whole must understand how and why viewers consume scripted video content. What works on YouTube or social media doesn’t always translate to scripted. The audience for taking in a great story chopped up into tiny 7-minute segments is just not there, particularly when there’s a price tag attached.