Slow Death

Quibi thinks it's worth buying, seeks a lifesaver as it sinks

Who would buy a quick bite?

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On Monday, The Wall Street Journal reported that Quibi is looking into a few strategic options to save itself, including a possible sale. The short-form video platform might simply try to raise more money or get scooped up by someone with deep pockets, hands-off leadership, and poor decision-making skills. Quibi launched in April, head-first into the pandemic, and is projected to hit less than one-third of its paid subscriber goal this year.

A sinking ship — As is the case for most of us, 2020 is not Quibi’s year. Even before the pandemic hit, the platform planned on burning through its war chest resulting in about a $550 million loss in operational costs. Prior to entering an increasingly crowded market, it was hit with a patent lawsuit over its Turnstyle video technology.

Once it officially launched, quarantine was in full effect and people had little need for quick bites. Though it was prepared to hemorrhage money, its catastrophic performance sprung unexpected leaks. As advertisers reworked deals based on lackluster viewership, Quibi quickly started to cave on its principles, uploading shows to YouTube and most recently, playing a long-bite at a drive-in theater.

Exploring some options — The WSJ’s source claims Quibi is looking into securing another round of funding, getting bought outright, or going public through a special-purpose acquisition company (SPAC) merger. Special-purpose acquisition company mergers are hot right now because SPACs are essentially blank check companies that raise money by going public. The existing company gets access to capital while retaining a stake in the business without all the risks associated with a solo initial public offering (IPO).

What would a buyer even get out of Quibi? — It’s difficult to imagine anyone acquiring or merging with Quibi considering it doesn’t really own anything. Quibi’s major piece of technology — its Turnstyle video rotation, for filmmakers who don’t care about aspect ratios — is potentially infringing on a patent, and it only owns the short versions of its “shows” for seven years. The rights for longer versions are returned to creators in just a couple of years.

Whether they’re venture capitalists or average shareholders, the notion of people giving the company more runway to crash on feels like a fantasy. People won’t even subscribe to Quibi in a time where competitors like Netflix and Disney+ are thriving. Even other newcomers like Peacock and HBO Max, armed with positive brand recognition and Fortune 500 parent companies, are hitting or surpassing subscriber benchmarks.

Quibi’s major studio backers only pitched in a few million here and there of its $1.75 billion of VC funding, probably only as schmuck insurance in case it was accidentally a hit. It’s unlikely they’ll support the company any further, especially as their own streaming products continue to perform at or beyond expectations.

This desperate scramble for cash could be the final pitfall for a company the vast majority of people expected to fail.