It’s a lesson that all product people need to learn; you can have all the ingredients for a successful product and still fall flat on your face. By now it’s well known that Quibi, which launched in April of 2020 and raised $1.75 billion in funding, is set to shut down in December…only eight months after launching.
While there’s no joy in watching a well-intentioned product fail, it’s important to examine why a seemingly sure-fire recipe for success still managed to be dead on arrival.
Here, we’re going to take a close look at what went wrong with Quibi, and what the moral of the story is for Product Managers.
What Was Quibi?
Quibi, short for ‘quick bites’ was a new entry to the streaming service battle, with the focus being on short form content for mobile devices. With founders Jeffrey Katzenberg (the former chairman of The Walt Disney Company) and Meg Whitman (former CEO of eBay and Proctor & Gamble board member), Quibi was to be led by a powerhouse of talent.
And that talent extended to the content, with big names like Liam Hemsworth, Chrissy Teigan, Adam Devine, Joe Jonas, and Idris Elba…just to name a few.
So what precisely set Quibi apart from the giants already dominating the space, like Netflix and HBO? Quibi content specifically focused on short form video, with the idea being that people wanted to waste time on their phones (waiting in line, during their morning commute, waiting for class to start etc) so why couldn’t they do that with great A-list led stories?
You might also be interested in: How to Get a Product Management Job at Netflix
Quibi’s original shows ranged from travel and culture, to humor and even blockbuster quality action shows. Quibi’s shows even earned them 10 Emmy award nominations, including Outstanding Short Form Comedy or Drama Series.
The tech was pretty impressive as well, with every piece of content being viewable in both portrait and landscape mode, with the change between the two being seamless enough that it wouldn’t interrupt the flow of the show.
Chatter online was cautiously positive, with many projecting a tough fight in a space already dominated by big name brands, but Quibi was armed with many reasons to be optimistic.
It wasn’t all sunshine and rainbows for Quibi after launch. The launch itself was, on paper, a success. The app was downloaded 1.7 million times in release week, reached #3 in the App store for that day, and was the 11th most downloaded app of the month.
While this looks great to the untrained eye, this was actually well short of the projections. When you’ve spent billions on development, to only have 1.3 million active users out of the predicted 5 million, that’s gotta sting! Katzenberg was very upfront about the disappointing numbers, admitting they were ‘not what we wanted.’
The company attributed the low figures to the coronavirus, but companies like Netflix and HBO saw a great boom in usage. Netflix actually had to slow down their transmissions to some cities in Europe at the peak of their lockdowns, in a bid to avoid broadband overload. Everyone was inside, and everyone wanted something to watch. So a free trial of Quibi seemed like a worthwhile use of time.
Unfortunately for many, the free trial is where their journey with Quibi ended. It was reported that only 27% of users opted to pay for the service once their free trial had come to and end. People were happy to check out Quibi, but not to pay for it.
Not willing to go down without a fight, Quibi raised a further $750 million in funding. But with their annual subscribers being projected at 2 million, rather than the estimated 7.4 million…the writing was on the wall. By October 2020, the Wall Street Journal reported that Quibi would shut down.
What Went Wrong?
So how did we go from a promising new platform, with billions in the bank and all-star talent, to a tragic fall?
There were a few things that stood between Quibi and success:
A Saturated Market
Video and content streaming is already one of the most competitive spaces to enter into, so any newcomer is already set up for a tough road ahead.
One of the things that was meant to set Quibi apart was it’s original content, a strategy which works well for HBO and Netflix. Unfortunately it’s worked a little too well for Netflix and HBO, with their shows being monumentally impactful to the zeitgeist of current times.
If given the choice between a platform that no one has used yet, or a platform that has all the shows you’ve been meaning to watch for months…for many the choice is clear.
In the same year as Quibi’s launch, Disney+ and NBC were business paying big bucks to acquire popular back catalogues of content. Something which Quibi would not be able to do with their phone-first business model. And something they could not afford to do, with the amount on money already spent on original content.
So while Quibi had some promising shows, the huge number of competitor’s with quality original content made for an unequal battlefield.
User viewing habits
Short form video streaming already exists, on a little site called YouTube, which you may have heard of.
YouTube has also lately been developing its own original content through YouTube Red.
You might also be interested in: How to Get a Product Management Job at YouTube
With Instagram, Facebook, and TikTok also providing video content for their legions of daily active users, the gap for short form videos wasn’t as wide as Quibi imagined. Especially as all of these platforms provide their services for free.
Unfortunately, people just aren’t crying out for more ways to watch films and movies on their phones. Those who do, probably already have their chosen sources.
Stars don’t sell like they used to
Celebrities have been an asset to companies for years, and in advertising a celebrity endorsement can be a powerful call to action.
But it seems that relying on celebrities, no matter how popular they are, to convert users over to a new entertainment platform isn’t as powerful as you would think.
Some analysts have posited that influencer marketing is much more impactful with Quibi’s target market than Hollywood A-listers. Those who like Liam Hemsworth might check out his show during their free trial, but evidently they’re not motivated to stick around after that.
Audiences are spoilt for choice when it comes to accessing their favorite stars, so the prospect of paying extra money for more content just isn’t appealing.
You might also be interested in: 5 Keys to Drive Growth Through Product and Marketing Strategies
$1.75 billion sounds like a lot of money, and of course it is. But when you look at a breakdown of how Quibi’s money was spent, versus the disappointing number of paid subscribers, it’s easy to see how that money pot can run dry.
Underestimating the power of their tech
The only things left for Quibi to hang on to was its innovative tech. But many tech lovers bemoaned the missed opportunity of interactivity. Sure, you could watch shows in either portrait or landscape, but how many people actually want to watch movies in portrait mode?
Having some kind of interactivity built in, which Netflix has already used lightly in their choose-your-own-adventure style specials, would have been another step in setting Quibi apart from the pack. While this may have been something that could be invested in later down the line, it was not a feature that was included at launch.
Lessons Learned the Hard Way
It’s a bitter truth to swallow that what happened to Quibi can happen to any product. So what lessons should Product Managers take away from this rise and fall?
- Don’t rest on your laurels. You might have all the money, all the time, and all of the resources for a successful product. You might have a team of millionaire superstars leading your company. But without doing the work and building in the right way, there’s no safety net on Earth that can keep you afloat.
- Find your product-market fit. You need to know where your product will sit in the market. This is crucial for survival, let alone success!
- Perfect your go-to-market strategy. This is another key step towards launching in the right way, at the right time, and in all the right places.
Learn How to Build Successful Digital Products
We hope you found this mini-lesson on what makes a product fail…and we hope you’ll never have to learn it as hard as the owners of Quibi!
To that end, we’ve made our masterclass on How to Build Digital Products (worth $1,999) totally free! It’s packed with expert speakers who are going to give you the lowdown on what it takes to build great products. Simply click the banner below and your coupon will already be applied. Good luck!