Quibi Is Struggling Because It Overestimated How Consumers Absorb Short Content

Though the streamer is blaming its rocky start to Covid-19

quibi interface on a cellphone screen
Quibi failed because of it miscalculated how people take in their short-form content. Getty Images
Headshot of Ben Silverstein

Quibi isn’t failing because of the novel coronavirus pandemic, lack of brand awareness or even poor content. It’s failing because the whole premise is based on an incorrect assumption about consumer wants.

Quibi has spent nearly $2 billion on their creation and release. Even if you don’t really know what Quibi is, you’ve likely seen that name thanks to their countless ad campaigns. But a couple months into its release, the app has fewer than 3 million downloads and 2 million active users.

Quibi didn’t consider how the individual consumer would view and react to the product.

Co-founder Jeffrey Katzenberg recently told The New York Times he blames their struggles on Covid-19 and the fact that they launched right when the outbreak started to take hold in the state. This claim is made despite the fact that, according to eMarketer, time spent on short-form video apps in March 2020 was up 54% from the previous year.

There are lots of things people can, have and will point to when trying to explain why this enormous investment is failing. However, there is a major fundamental issue that is being overlooked: People don’t associate short-form content with quality.

Recently, there have been many studies that show that people consume on average about 20 minutes of online content for each class. Many e-learning platforms have promoted these stats and encouraged people to create shorter content. Why spend time making a three-hour course if only 20 minutes will be consumed? However, the sales data shows that longer classes sell better, even if people only watch 20 minutes of it.

The issue with Quibi is that they looked at the right data but came to the wrong conclusion. People may only consume 10 minutes of video content, but they either want the option to consume more or perceive that longer content equals better quality.

Here are a few examples. Warby Parker wanted to sell prescription glasses for $20 each. However, at that price, no one bought them because they thought that was too cheap for good, quality glasses. When they raised the price to $99, they flew off the shelves. And when Peloton started selling bikes, they were priced at $1,200. But sales didn’t really grow until they doubled the price to $2,400.

Higher cost equals better quality in the minds of consumers. And when it comes to content, the length of the content equals the perceived quality.

How could the data be so wrong? Well, it wouldn’t be the first time.

When buying and selling stocks, there are lots of things to consider: the profitability of a company, industry trends, P/E ratios. In theory, you should be able to crunch all the data and figure out which stocks will do better than others. If that were the case then everyone would be rich, right?

The reason why you can’t use data to predict 100% of all outcomes is because you can’t calculate individual personalities. A company could be doing everything right, but the CEO might have personal or family issues that distract them from their job. An executive might sleep through a meeting and lose a big sale.

Look at where people are consuming free content versus paid content. The largest platform for short-form content is YouTube, which is free. There are lots of high-quality YouTube producers, but their content isn’t on par with Netflix, Hulu, Amazon, HBO and other paid streaming services. And those paid services all have content that’s 30 minutes or longer.

If Quibi was free, perhaps they would get more users. But as a paid service, they will struggle to convince consumers that their five- to 10-minute shows are worth the same as longer content. Quibi didn’t consider how the individual consumer would view and react to the product. They might only watch 10 minutes of content, but they’d rather watch part of a high-quality program than 100% of something they perceive to be a lesser quality product.

It might not be too late to salvage the product, but I believe this key oversight is the reason this $2 billion company is struggling.


@BenS_Official Ben Silverstein is founder of AdCoach.
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