Quibi is shutting down 6 months after the $2 billion video service's debut

Quibi said it is shutting down just six months after the early April launch of the short-video app, having struggled to find customers. The service, which had raised $1.75 billion in funding, was run by entertainment executive Jeffrey Katzenberg and former Hewlett-Packard CEO Meg Whitman, and featured  some of the biggest corporate names in Hollywood as backers.

The company said Wednesday that it would wind down its operations, and plans to sell its assets. "Quibi is not succeeding," its top executives bluntly declared in a letter posted online.

The video platform — short for "quick bites" and designed for people out and about to watch short videos on their phones — was one of a slew of new streaming services to challenge Netflix over the past few years, most of which were part of much bigger tech and entertainment companies, like Apple and Disney. Despite securing almost $2 billion in funding from Hollywood companies including Disney and NBCUniversal, the service failed to catch on.

"There was no question that keeping us going was not going to have a different outcome, it was just going to spend a whole lot more money without any value to show for it," Katzenberg told entertainment publication Deadline in an interview. 

Part of the appeal of the service, which started at $5 a month, was supposed to be that you could watch short videos while out, without access to a TV. Being stuck at home made TV more desirable than watching on a phone, and Quibi only later and slowly rolled out TV options. 

But short videos abound on the internet, and the coronavirus pandemic kept many people at home. 

"We needed to really come out of the starting gate in a very big way in order for this to work," Katzenberg told Deadline. "Now, how much of this was impacted by COVID will always be unknown."

Star lineup

Katzenberg's connections helped line up stars to make and star in its videos, including Reese Witherspoon, Steven Spielberg and Jennifer Lopez. There was a short version of "60 Minutes" and reality shows. ("60 Minutes" is a property of CBS News parent ViacomCBS.) The Quibi shows never achieved big name recognition, although the platform scored some Emmys earlier this year.

Why did it fail? "Likely for one of two reasons: because the idea itself wasn't strong enough to justify a standalone streaming service or because of our timing," Katzenberg and Whitman wrote. "Unfortunately, we will never know but we suspect it's been a combination of the two."

Quibi doesn't release subscriber figures. Mobile research firm Sensor Tower estimates 9.6 million installations of Quibi's mobile app since its launch, but that doesn't mean those are actually users. Other streaming services have benefited from having customers stuck at home during the pandemic. One of the most successful new services, Disney Plus, has more than 60 million subscribers. Netflix has had a blockbuster year.

"While we have enough capital to continue operating for a significant period of time, we made the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our talented colleagues with grace," Whitman, the CEO, said in a statement.

The company said that money from the sale of its assets will go toward paying off liabilities and whatever remains will be returned to investors. One of its investors is Viacom, the entertainment company that merged with CBS in December to form ViacomCBS, the parent of CBS Interactive and CBS News.