R.I.P. Quibi. The short-form streaming service had its grave dug and wreathed with flowers well before consumers set eyes on a single episode, at least based on bets from onlookers.
Take a scroll through Twitter and there are any number of “I told you so”’s—and resurfaced tweets from before Quibi’s launch—assigning blame to billionaire hubris and a saturated streaming environment.
So if there was so much certainty in Quibi’s demise before the service even hit the app store (see my predecessor Polina Marinova’s post), why did any investors make the leap?
I caught up with Anis Uzzaman, general partner and CEO of Pegasus Tech Ventures, which invested some $35 million in the company in one of its later rounds of funding.
Yes, he had his doubts about Quibi when investing, but the company “already had a lot of ad revenue completed,” says Uzzaman, pointing to deals inked with T-Mobile, General Mills, and Walmart. “What kinds of companies have that for a product that has not yet launched?”
Many will point to the lack of venture investors on Quibi’s roster of backers—which, at first glance, sets Pegasus apart. But that’s not exactly the case: Pegasus invested in Quibi in part because the fund works with corporations to make investments. Japan’s Asahi Broadcasting Group, which launched a $200 million fund with Pegasus, wanted to work with Quibi in the long term.
Uzzaman was remarkably calm for an investor who expects to get none of the $350 million Quibi still holds in cash, since Pegasus flew in to a later round (though he is hoping he may recoup 20% to 40% of his investment via the sale of some of Quibi’s assets). I asked as much: Aren’t you angry?
“My first reaction was, why are they giving up so fast? In startups, there are failures all the time—but people turn it around. Why didn’t the company get rid of the titles that didn’t do well, and retry? Instead they continued with the same business model for several months,” he says. “They still had $350 million, and they are getting out? It doesn’t make sense to me. It blows.”
At any rate, Quibi’s leaders say they did try to change the model—though to no avail.
“Over the summer, we started to see a slowdown in our momentum and we tried many different things—many different product packaging models, we changed our marketing, we changed the app around many different times, but it was clear for whatever reason, this was not going to be as successful as Jeffrey and I had hoped,” Whitman said on CNBC in late October.
Meanwhile, Netflix last week said it would raise prices once again for its U.S. customers amid signs of slower customer growth—but also low turnover. Spotify is also planning to raise prices, according to CEO Daniel Ek following the company’s earnings call last week. And yes—I have no doubts consumers will pay for the Netflix bump, if only to keep bored-at-home children busy.
ANTITRUST MIXES UP THE M&A WORLD: Amid news that the U.S. Department of Justice is taking a hard look at deals by large incumbents to acquire fintech startups, one of those deals is now looking to offload a piece of the business to put out antitrust concerns. Credit Karma, which had agreed earlier this year to be acquired for $7.1 billion by tax-software maker Intuit, is looking to sell its tax preparation business to Square, per the Wall Street Journal.