One of the biggest headlines this week has been the fall of short-form entertainment service for mobile phones Quibi.
The company announced Wednesday that it would shut down just over six months after it launched.
Quibi’s founder Jeffrey Katzenberg and CEO Meg Whitman told CNBC this week that a convergence of factors led to the failure of the app.
While Quibi raised nearly $2 billion in funding ahead of its launch in April, it couldn’t deliver on subscribers. Investors included Disney, Comcast’s NBCUniversal and AT&T’s WarnerMedia.
Whitman said the company has at least $350 million in cash, but expects there will be “much more”
to return to shareholders following its wind down.
“We had a new product. We asked people to pay for it before they actually understood what it was. I think we thought there would be easier adoption by people to it,” Katzenberg said in an interview with Julia Boorstin. According to Katzenberg, the Covid-19 pandemic also affected the company as the virus affected people’s travel.
Quibi’s goal for the app was to appeal to a younger demographic who wanted content while on the go. As the app debuted just weeks after the pandemic hi, this impeded travel.
Quibi, which cost $4.99 per month, originally projected it would have more than 7 million subscribers after its first year. The app had about 500,000 subscribers as of a few weeks ago, CNBC reported.
“It was clear that for whatever reason this was not going to be as successful as Jeffrey and I hoped,” Whitman said. “The honorable thing to do is return money to shareholders when we knew this was not going to have a path forward as a viable, stand-alone business.”
“For me, I’ve got to get on that horse and find the next mountain to charge up. It’s the only thing I know how to do and I’ve got a lot to prove,” Katzenberg said.
The co-founders will be shutting down the business and selling assets these next coming months.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.