Quibi, a streaming service app founded by media mogul Jeffrey Katzenberg, is considering its options, including a possible sale, according to The Wall Street Journal.
The company, which calls itself the “first entertainment platform designed specifically for your phone,” is also considering raising more money or going public through a merger with a special-purpose acquisition company (SPAC), WSJ reported. These SPACs are blank-check companies that help fund deals.
The potential for a strategic move comes as the 5-month-old startup is facing challenges. A survey reported by Fierce Video, which cited Kantar’s Entertainment On Demand, found one-third of Quibi's 1.5 million subscribers say they plan to cancel their 90-day free trial when the offer ends.
Quibi features five- and 10-minute videos that tell a story over several chapters. Its short-form style of programming also puts it in competition with YouTube.
The Los Angeles-based company declined to say whether it is pursuing a sale, WSJ reported, and it might decide not to pursue any of the options it's considering.
“Quibi has successfully launched a new business and pioneered a new form of storytelling and state-of-the-art platform,” a spokeswoman told WSJ in a statement. Katzenberg and CEO Meg Whitman “are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees.”
Katzenberg, the former Walt Disney chairman, raised $1 billion in Quibi’s first funding round in 2018.
In March, at the start of the pandemic in the U.S., it was thought that new streaming offerings could benefit from the outbreak.
“If people are sitting at home, can’t go to the movies, and all you have to do is hit one button and it’s a tenth of the price of cable, why would this be bad for subscriber growth?” said Rich Greenfield, a media analyst at LightShed. “All the streamers will benefit.”
One month before its launch, Quibi closed on $750 million in financing, WSJ reported.
Whitman told WSJ at the time that the new financing was made to ensure that the company would have the financial flexibility to build a long-term business. The company’s new investment contains both existing investors, including the Alibaba Group and Hollywood Studios, along with WndrCo, the investment firm and holding company launched by Katzenberg. Before launch, Quibi had raised $1.75 billion.
This time, Quibi could seek investments from tech and media companies, WSJ reported.
