Quibi launches in a world paralyzed by coronavirus

April 6, 2020, 3:22 PM UTC

After 20 months of build up, nearly $2 billion in raised funds from some of the world’s largest entertainment companies, and dozens of A-list celebrity endorsements, Quibi—the new short-form video streaming service designed for on-the-go use—finally launched this morning, offering plans priced at $4.99 (with ads) and $7.99 per month (without) after a free 90-day trial.

Quibi’s arrival has been hotly anticipated and its utility intensely debated. The venture’s pedigree draws equally from Hollywood and Silicon Valley—it’s led by CEO (and former eBay and Hewlett-Packard chief executive) Meg Whitman and chairman (and DreamWorks cofounder) Jeffrey Katzenberg—and its attraction relies heavily on the free minutes people find at the “doctor’s office, commuting to work, waiting for the kids at school,” as Whitman said in January.

Quibi’s executives expected that a mobile-first approach would at least differentiate the service and at most establish a new entertainment category. What they didn’t expect: that it would launch in the midst of the global coronavirus pandemic that has virtually eliminated routine medical appointments, work commutes, and school.

“We are in a moment of time in which we have more dislocation, disruption, distress than most of us have ever experienced in our lifetimes, certainly unprecedented in scale across the entire country,” Katzenberg tells Fortune.

In Hollywood, the pandemic has brought an industry known for its elbow-rubbing to a near standstill. For Quibi, COVID-19 concerns led it to cancel a glitzy Los Angeles launch party scheduled for yesterday. The red-carpet event—naturally—would have touted Quibi’s 50-plus original launch titles, which include movies (broken up into four- to 10-minute chapters), reality TV, documentaries, and so-called Daily Essentials: news programs and talk shows. Some of these offerings star or were created by big-name Hollywood talent; Quibi’s collaborators include Steven Spielberg, Chrissy Teigen, Reese Witherspoon, LeBron James, and Zac Efron, among others.

The curious silver lining to a world turned upside down, though, is that people are streaming video more than ever as they shelter in place to avoid spreading the virus. Demand for Hollywood’s wares has spiked even as stay-at-home orders have made it nearly impossible for the industry to create more.

For Quibi, production on some of its dramatic and documentary offerings had already been completed before sets shut down. (Among them: the disaster drama Survive, starring Game of Thrones actor Sophie Turner.) But the coronavirus outbreak has forced creators producing the platform’s daily offerings, not to mention Quibi’s more than 250 employees, to work from home.

“We had to rethink production from the ground up,” says Eric Eddings, cohost of The Nod, a daily Quibi show focused on black culture. He and cohost Brittany Luse had to pivot from a set in a Manhattan studio to their apartments in Brooklyn and Los Angeles, respectively. “It was a mad dash to figure out how to take this thing in one specific context and break it up with all these people in different locations,” Luse adds. “There were technological challenges.”

Katzenberg says Quibi was able to proceed with all but one of its Daily Essentials, a live comedy show that couldn’t be recorded given shutdown orders for clubs and other live entertainment venues. Quibi’s executives considered postponing the service’s launch; Whitman and Katzenberg ultimately decided to stay the course but extend its free trial from two weeks to 90 days.

“The real pivot in all of this was to say, ‘Okay, but we should make it free,’” Katzenberg says, referring to the trial period. “We look at the 90 days as building goodwill, having people really learn what Quibi is, and having them fall in love with it. And if they do, we will win.”

An open question is what the world will look like in 90 days’ time. Quibi’s lengthy trial risks asking customers for payment as the global economy dips into a recession—or worse. More than 10 million Americans filed for unemployment benefits in the past two weeks as businesses of all kinds bore the brunt of pandemic shutdown orders.

What’s more, Quibi’s limited library may turn out to be a liability with a longer trial period, says Kirby Grines, founder of 43Twenty, a strategic advisory firm for direct-to-consumer video.

“Let’s say people do consume this content and consume a lot of it. They’re looking for a lot of things to fill out increased entertainment time,” says Grines. “Are they going to subscribe to the plan, or did they consume everything out of the service? There are 50 launch titles, seven-minute chunks—not a whole lot of content. Quibi is promising a good refresh schedule, but production has stagnated.”

Katzenberg told Variety last week that Quibi has filmed enough content to last through Halloween this year. The startup—anticipating a different sort of disaster, a potential Writers Guild strike—upped its release schedule from 8,500 episodes to 9,600 episodes in the first year, he said.

Asked how Quibi’s success could be defined or measured in the face of the pandemic’s extraordinary circumstances, Katzenberg tells Fortune: “The answer is, we’re in uncharted territory.”

“Our feeling is, what matters to Quibi, what our business is built on, is paid net subscribers. Period,” he says. “We won’t have paid net subscribers for a couple of months, and that’s the business decision that Meg and I made four weeks ago.”

Will Quibi’s phone-first content catch on with homebound viewers who can watch shows on their living room televisions using services like Netflix, Disney+, Hulu, Amazon, and others? Both Whitman and Katzenberg have insisted that the popular streaming services are not Quibi rivals—short-form video apps like YouTube and TikTok are perhaps more accurate—though the reality is that they all compete for screen time in a quarantine.

“What Quibi is trying to do is somewhere [in terms of difficulty] between a hat trick and a moonshot,” says Eric Schmitt, a TV and digital video analyst at Gartner. “They’ve got to do all this in an environment where people have access to the big screen.”

Katzenberg, who has faced skepticism about Quibi for months on end, isn’t fazed: “All I can say is, for 45 years I’ve never had anything that was really, really good that didn’t work.”

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