The Implications of Quibi’s Shut Down

Quibi has announced they have decided to shut down the service. I’m sure this is not a shock to many, although the implications are worth teasing out since I feel some conclusions are worth making.

Quibi’s commentary from management about the decision to shut down the service was largely blamed on timing. As many have pointed out, the timing should not have been better to launch a new service. It has been argued that people, during this pandemic, prefer long-form content over the short-term content Quibi was offering, but my take is good content will get watched and be in demand no matter the length.

What is interesting is the decision to simply shut the door and move-on. It is curious that Quibi, with quite a bit of cash still in the bank, is not attempting at least one pivot to see if they can turn the tide. It must have been concluded the cost to continue to compete, even in a pivot, would have required even more money they had access to, and with raising more money not an option, the conclusion was to cut their losses. This point leads to the main observation that sticks out to me.

Content is hard, and consumer attention is minimal. This was the root of Quibi’s challenge, but as we observe the significant amount of money raised by the company, it is another reminder of how expensive content is. The cost to get in and compete in the content market is borderline astronomical. Both of these points lead to the conclusion that the content industry is basically settled. There will not be content startups for a long-tine if ever that leads with high production value content.

This observation felt mostly obvious given the cost of content and the dynamic of competition favoring companies with existing distribution and a load of cash. There could still be new entrants into the content business, but they will be large established companies, not upstarts who require significant amounts of private financing.

The other implication, and this is a bit of speculation on my part, but I think it is logical, is I feel more consolidation is still to come for the content industry. Given the anti-trust scrutiny Apple, Amazon, Google, and Facebook are under, and I’m not sure if those companies are candidates in the near future to acquire content companies or a broadcast network. Still, I do think the NBC and CBS companies of the world may find themselves needing a partner with more cash and seek to sell.

The point goes back to the scarce attention consumers have and how the platform companies, in many regards, eat up a significant amount of that consumer attention with their core products.

The last implication I want to mention is how celebrities and or content owners/producers may be forced to rethink, where they prioritize their efforts. Quibi had a strong collaboration with top name actors/actresses, and while I’m sure many of them were paid upfront, I’ve heard from my friends who work in talent management that many of these actors/actresses are looking to new media opportunities to not just get paid upfront but also share in revenue growth in the long-term. I wonder if these owners/producers/and talent will start to look for new opportunities or just stick with the known success routes by working with Netflix, Apple, Amazon, etc. Again, the implications here, in my view, are what Quibi’s failure does to future innovative opportunities from the entertainment/content industry.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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