LOS ANGELES — Less than seven months after Jeffrey Katzenberg and Meg Whitman launched Quibi to remake the business of short-form video, the nascent streaming service is shutting down, the company said Wednesday.
Katzenberg and Whitman told investors Wednesday afternoon that Quibi, which raised $1.75 billion to tackle the growing digital video market, will wind down after failing to attract viewers willing to pay to watch its shows, according to people familiar with the matter who were not authorized to comment.
Hollywood-based Quibi, which employed 265 people as of April, plans to use its remaining cash of about $350 million to pay back investors, sources said, a stunning turn of events for one of Hollywood's highest-profile startups in years.
Quibi said in a statement it will close down the business and begin the process of selling off assets over the coming months.
"The world has changed dramatically since Quibi launched and our standalone business model is no longer viable," Katzenberg said in the statement. "I am deeply grateful to our employees, investors, talent, studio partners and advertisers for their partnership in bringing Quibi to millions of mobile devices."
Quibi, short for "quick bites," launched in early April with a bold bet on shows and movies with episodes lasting 10 minutes or less. The company charged $5 a month for people to watch with ads and $8 for a commercial-free version. Backers included major entertainment and media companies such as Walt Disney Co., ViacomCBS, AT&T's WarnerMedia, Sony Pictures Entertainment and China's Alibaba Group, along with more traditional financiers such as JPMorgan Chase & Co., Goldman Sachs and Madrone Capital.
The idea was that the platform would stand out from free rivals like YouTube, TikTok and Snapchat by bringing Hollywood-level production values to short-form content. Quibi shows featured celebrities such as Chrissy Teigen and Liam Hemsworth.
The strategy failed. Launching amid the global COVID-19 pandemic, Quibi quickly fell out of the top ranks of app store sales charts as its shows struggled to draw subscribers. The service also missed key viewership targets for advertisers.
The decision to shutter Quibi — first reported by the Information and the Wall Street Journal — is the most spectacular failure yet in the media industry's streaming wars era, which has seen the launch of well-backed services including Walt Disney Co.'s Disney+, AT&T Inc.'s HBO Max and Comcast Corp.'s Peacock. Though each streamer has followed a different strategy, all are meant to keep their parent companies relevant at a time when Netflix continues to spend heavily on shows and movies for its platform.
Many analysts had been skeptical from the start that Quibi would be able to succeed. Previous efforts to capitalize on young viewers' appetite for online video have collapsed, including Verizon's Go90, which shut down in 2018. Hollywood history is rife with examples of bold attempts to shake up the business that flamed out, including Relativity Media and Open Road Films.