The Failure of Quibi (and the vulnerability of all the streamers)
A year ago my teenage stepkids had a bunch of friends over to watch one of the Avengers movies. I have no idea which one. When faced with a gaggle of 14-16 year olds, from different social circles with a sibling rivalry in the middle of it, I hide.
They descended on us like locusts. They swarmed. They covered every available surface. They ate everything in sight.
A loud argument broke out because someone hated someone else. Hearing the commotion I came downstairs and yelled at everyone. I went to the kitchen to try to grab any piece of food that was left before the puberty crazed swarm obliterated the remainder. I made, to my recollection, a very odd sandwich. A bagel sandwich. Which consisted of two different bagel halves. With some kind of hideous but allegedly healthy cashew cheese slices (of course the teenagers left me the cashew cheese). Instead of mayo something that was fake mayo but entirely plant-based which tasted exactly like fake mayo. An old, hardened piece of prosciutto.
By the time I got done creating that monstrosity the argument was over, the movie was on pause about 4 minutes in. Kids in groups of two’s and three’s were huddled on the sofa, the floor, one chair, frantically thumbing their phones and dissolving into peels of teenage giggles. The two earlier combatants were filming themselves making out.
The excitement level around whatever was happening on their phones accelerated and kept accelerating. The film was on what seemed like a permanent pause.
They got through one more scene that night. This pattern continued for the next two days. We started the film at 7pm on a Friday night. It concluded at 9pm on Sunday night.
What they were doing: during the opening scene they paused and one of the kids shot his version of a piece of that scene and shared it on TikTok. A couple of other kids got together and did their version. Pretty soon all the kids were grouping up and doing the same. Then other friends of theirs who weren’t part of the madness happening in our front room jumped in from wherever they were. And then kids from other parts of the country and other countries and the whole damn thing exploded.
This was way more fun for them than watching the movie. One of the kids bailed. She wanted to watch the movie. She was a very small segment of the relevant population. The following day they shot more scenes and responded to people who responded to scenes from the day before and it became an all encompassing weekend. The movie was the catalyst. The real fun for the kids was in the multi-way communication and collaboration among at least hundreds and potentially thousands of participants and viewers of the TikTok thread.
The real activity that weekend was on TikTok. TikTok reaped the lion’s share of that value. What value existed for the production house that made the film, the studio that released it, and the online platform that distributed it was diffuse and indirect if there was any at all. Every player in that chain was a more natural and logical choice to be the platform that triggered and benefitted from that level of engagement.
Instead, due to their complete lack of imagination, they opened the door for a burgeoning (in the US) platform to capture the audience with the greatest lifetime value potential – teenagers emerging into the marketplace. That was when I knew that the services being launched by the Disney’s, Warner’s, Comcasts of the world were guaranteeing their commoditization. All of them are one-way distribution channels. All of them assume that the prevailing underlying art will follow the same rules as art that can be created in new ways given the advance of technology.
Exhibit A is Quibi.
When a company goes under, it is almost never because of one thing. When you really dig into it, you’ll find a failure cascade…one thing that took the company off the happy path and triggered a string of failures that avalanche-like gain in size and speed as it rolls downhill.
There are lots of reasons being posited for Quibi’s demise. All of them have merit or at least rational underpinnings. There’s the name – let’s name a company something that no one knows how to pronounce so you burn money just marketing that instead of stuff people will buy. Let’s further complicate it by making it a bizarre mash up of something that didn’t need to be mashed up. Short for Quick Bites, the company evidently concluded that was too arduous to say and not hip enough so they shortened it to QuiBi…get it? AND THEN WE SCREWED WITH IT EVEN MORE by changing the pronunciation to Qui-bee, losing any connection with the word “bite” and thus the phrasing that would give you some indication of what the hell this company was all about. There’s the content – did anyone want short form (yes, see TikTok, YouTube, Reels)? So, more accurately we’d ask, did anyone want scripted well-produced short form? Was there a general level of unhappiness with the concept of the pause button? I saw one alleged analyst say that they failed because “failed to grow their subscriber base”. No shit, dude. That’s obvious. That’s like saying California had a horrific fire season because their forests burned. The real question is why did they fail to grow their subscriber base. What was the root cause of that? It sure as hell wasn’t a lack of marketing and PR. A rather popular one is a crowded and hyper-competitive market. Also, not a root cause. Or, if it is, Quibi has to go down as the dumbest company ever. How did you not see that coming? I knew it was a crowded and hyper-competitive market and I don’t pay much attention to that sector.
The company, and various pundits, seem to be coalescing around two causes, the pricing model (with a consensus building around how the company should have gone freemium) and the coronavirus changing the way people work, thus doing away with morning and evening commutes and the window in which people would be consuming short-form content.
Both of which are mind-bogglingly stupid.
Let’s reverse the order of those. The vast majority of the country still commutes by car. So, this model failed because people were no longer commuting so they couldn’t consume short form video while driving? Can you imagine the legal liability? I can’t tell if Meg Whitman, who is a brilliant business person, is spinning us when she cites that as a reason, or if she has somehow gotten less smart.
You’ve burned through $1.4B and the magic fix is freemium? How does that do anything to recoup that investment? Before anyone says “Amazon” remember that Amazon was always a platform and always about data. Quibi was not set up that way. Quibi was identical to every entertainment company’s streaming platform with the only difference being that it did short form.
It shares the same vulnerability that Peacock, Warner, Disney+, et. al, have. They are one way distribution mechanisms for content created in a traditional form and format. The reason TikTok in particular didn’t take a hit during the pandemic and actually grew, has little to do with short form and everything to do with breaking the one-way distribution model. It, and others like it, are not one-way distribution models, but n-way collaboration platforms.
Here’s SDSS #1 (Stop. Doing. Stupid. Stuff) that we can extrapolate and learn from: Don’t fall in love with your model and your product to the point where you do not see the consumer. For the life of me, I can’t figure out the persona or the segment that Quibi was targeting, nor can I figure out why they’d think that what they were offering delivered on Better Than.
Which leads us to SDSS #2: Always step back from whatever customer strategy, offering, value proposition you have and ask yourself what you have to be better than. Falling in love with your own product vision and business strategy is seductive. Make sure you challenge it. Quibi had to be better than the Pause button. It wasn’t. It might have been worse than the pause button, but that’s subjective. It definitely wasn’t better than the pause button. When you’re disrupting anything you cannot be inferior to the status quo, and you cannot be as good as the status quo. You cannot even be marginally better than the status quo because inertia is a bitch. You have to be unequivocally better than what’s already there.
And that leads us to a new category we’ll explore in future pieces, SftF – Swing for the Fences. Being another entrant into a crowded space and doing everything exactly the same as the others save for a trivial change to a meaningless variable (run-time) is not Swinging for the Fences. It’s hoping you somehow get a Grand Slam bunt. Uber did not try to get taxis to be better. It blew up on-demand transportation. Amazon did not try to make bookstores better, it blew up provisioning of needs. No one in the video distribution game…or more accurately, none of the established players that are now all sprinting after the same “me, too” rabbit, are blowing up consumption and creation of video content. YouTube is. TikTok is. They will win. Unless those established entertainment, media and comms players wake up and figure out that they’re engaging in the modern day equivalent of doubling down on hardcover encyclopedias and polaroid photography.