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3 reasons Quibi will fail despite 10s of millions of sign-ups

Quibi could be headed for a start as spectacular as Disney+. It won’t last. Here are three reasons July could be the beginning of the end of the service.

Quibi headed for 10s of millions of initial sign-ups

Quibi, which launched today to mixed reviews, looks set for a massive ramp in subscribers, perhaps as big as Disney+. What’s not to like about the service? It is free for the first 90 days. There is a large variety of quality content, including news, reality, and scripted drama. Jeffrey Katzenberg, the company CEO, and Meg Whitman, COO, have attracted a panoply of A-list talent to create and star in the quick-bite content the service delivers.

To be sure, the launch has not been perfect. Users have reported difficulties signing up and logging into the app due to an outage, which was quickly resolved. As nScreenMedia predicted, there has been a backlash against the lack of television support.

However, with over 200 million U.S. smartphone users and 180 million smartphone video viewers, Quibi has an enormous potential customer base. Moreover, many of them have time on their hands right now and are keen to find new content to watch. It’s a safe bet that millions, possibly tens of millions, will give Quibi a try.

That said, success is far from guaranteed. In fact, prospects look decidedly bleak starting in July. Here are three reasons why, despite the masses of people likely to trial the service, Quibi will fail.

Reason #1: New content flow

Just like every other video entertainment service, Quibi is impacted by the halt in production caused by the COVID-19 pandemic. The full impact won’t be felt right away. The service has had months to ensure there is plenty to watch and talk about on social media. Presumably, it has lots of content finished and in post-production that will allow it to continue releasing new scripted and unscripted shows over the next month or so.

However, the full impact of the production freeze is liable to hit the service at its most vulnerable time. At the beginning of July, the first wave of subscribers will reach the end of their 90-day free trial and will be asked to pay. If new content flow has slowed to a trickle, many will cancel before their first payment.

Reason #2: Increased competition

NBCU is scheduled to launch the Peacock streaming service nationally on July 15th. If the buzz from the launch with Comcast Xfinity X1 and Flex customers on April 15th is good, watch for many people to sign-up. The ad-supported tier will be available for $5 a month and could be accompanied by a free-trial period of a month or so. With gold-plated content like Parks and Recreation and Brooklyn Nine-Nine, many are liable to sign up and give it a try.

HBO Max is scheduled to release in May and will cost $14.99 a month. It could also include an extended free-trial period, particularly if shelter-in-place orders are still widely in place. That said, HBO Max will also be caught by my third reason for Quibi’s struggles.

Reason #3: Consumer purse-tightening

With unemployment spiking everywhere and economists forecasting the recession could turn in to aTV brand source to keep if limited choice depression, many consumers will be looking very closely at every penny they spend. A service like Netflix seems somewhat secure. According to Hub Entertainment Research, 4-in-10 U.S. consumers consider the SVOD giant indispensable, and a quarter says the service has the best originals.

Quibi, as the new kid on the block, will not enjoy the same advantages as Netflix. Far from it. Everything about the service makes it ripe for trimming. The snackable content it provides, though of high quality, can’t deliver the same satisfaction as a full-length movie or serialized drama. As well, the seven minutes or so people spend watching a Quibi episode can easily be replaced with free content from YouTube or social media.

Why it matters

Quibi is liable to quickly attract millions, possibly tens-of-millions, of people signing up for the free trial.

The service will struggle to hold on to them.

The production freeze, new competition, and possible depression suggest Quibi will fail as many people cancel before their first payment.

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