Is Quibi the first casualty of the streaming wars?

Follow Us Get the newsletter Quibi is off to a rough start. Don't take it from me, take it from Quibi's co-founder, Jeffrey Katzenberg. The video app signed up fewer people than it expected in its first month, it failed to account for features those few users would want and it produced "daily essential" programs that are not essential. In an interview with the New York Times, Katzenberg blamed Quibi's poor start on the coronavirus. All I can say in response is: poppycock. (The Bloomberg terminal prohibits me from using the proper verbiage.) Streaming video services are booming during the coronavirus. Netflix added almost 16 million customers in the first quarter of the year. Disney+ surpassed 50 million subscribers in just a few months. Katzenberg claims it's a bad time for on-the-go viewing, but TikTok, Twitch, YouTube, Snapchat and Instagram are all seeing record usage. These are apps designed for the smartphone — just like Quibi.  Quibi was in trouble well before a virus shut down the world. Other startups have had the same business plan — YouTube, but different — and they all failed. Why? In the words of Omar Little on "The Wire," If you come at the king, you best not miss.YouTube is the most popular video site in the world. To get people to use your app instead of YouTube, you'd better give them a really, really good reason. Quibi's pitch is "YouTube but premium!" Quibi makes YouTube-length shows at Netflix-level spending. Red flag! YouTube is premium. People can watch full episodes of John Oliver's HBO show, which has won 16 Emmys and two Peabodys. They can watch clips from late-night shows hosted by Jimmy Fallon and James Corden. They can watch lavish music videos, sports highlights and trailers. And while YouTube stars may not be premium to people of a certain age, they are very much premium to their fans. Try telling subscribers to Shane Dawson or Lilly Singh that their videos are lower quality than anything on TV. To quote the Los Angeles Times, Quibi is YouTube for people who hate YouTube. Just one problem: Pretty much nobody hates YouTube. Quibi Chief Executive Officer Meg Whitman has said people will use the app while waiting in the dentist's office. Another red flag! This makes sense from an intellectual perspective. People are addicted to screens — they want to be entertained and overstimulated. But like with the whole premium concept, this failed to account for an obvious downside. We don't lack for apps to use when waiting at the dentist. We can answer email, scroll through Instagram, text friends, watching videos on YouTube, Snapchat and TikTok or tweet if we're feeling masochistic. We have a cornucopia of options available at our fingertips — for free! Why would anyone pay for something available everywhere at no cost? (This is the same problem that plagues Luminary, a podcasting startup that raised a ton of money and hasn't been able to attract customers.)  And so, the only way Quibi could work is if it produced a show that was a slam dunk. (See "The Mandalorian.") That hasn't happened. We can disagree as to why it didn't happen. It was the marketing! It was the quality! But we can agree Quibi has yet to produce a cultural sensation. That's not to say it can't happen. Quibi can still come up with a hit show. It can still find some company to overpay for it. But it's wounded. As one executive told me this week, producers sold to Quibi for two reasons: more buyers is good for business, and nobody wanted to bet against Katzenberg and Whitman. Now they have a reason to bet against them. — Lucas Shaw The Best of Screentime Free Streaming Services Rescue Cash-Strapped Couch Potatoes Free video streaming services like Pluto and Tubi are booming. 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Flea's memoir is a nice escape for anyone who wants to understand how a confused kid morphed into one of the world's great bass players.   Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more.   You received this message because you are subscribed to Bloomberg's Screentime newsletter. Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022