After committing to first-year sponsorship deals worth a reported $150 million, Quibi’s 10 bluechip advertising partners are now looking for a break.
According to the Wall Street Journal, the companies are seeking to revise deal terms with mobile-first streaming startup Quibi, following a softer-than-hoped-for product launch and the sudden steep recessionary turn of the global economy.
Also read: Quibi Content Is Good, But Not Good Enough to Win the ‘Attention Game,’ Analyst Says
Quibi’s iOS and Android mobile apps have been downloaded around 4.2 million times since the service launched April 6. According to the WSJ, around 1.5 million users signed up for the mobile-only service through the first-three-months-free promotion that was being offered in April.
Quibi is targeting 7 million first-year signups. That's still doable, but Jeffrey Katzenberg’s startup will have to turn things around soon for that to happen.
And now, the startup streaming service--backed by $1.75 billion in venture capital--is facing a pullback from ad backers including PepsiCo, Walmart, Yum Brands, Anheuser Bush InBev and Taco Bell
“We deeply value the commitments our advertising partners have made and are working in close partnership with them to learn and help them be successful on the platform,” Nicole McCormack, Quibi’s head of advertising partnerships, said in a statement.
‘We Feel Like We’ll Get Through This’
WSJ also reported that Quibi conducted an “all hands on deck” meeting last week, during which executives conceded that the COVID-19 pandemic isn’t the only factor limiting its launch performance. (Notably, just two weeks ago, Katzenberg told WSJ, “I attribute everything that has gone wrong to the coronavirus.”)
Quoting an unnamed meeting participant, the paper said an “over-reliance” on scripted shows was an issue for Quibi, as were too many inactive users and low overall enthusiasm for the service.
Amid the pandemic-fueled lockdown of video production facilities worldwide, Quibi continues to create original shows, and reality seems to now be the genre of choice—for example, the platform just launched a show built around “Kirby Jenner,” the performance artist who pretends to be a denizen of the Kardashian/Jenner celebrity clan.
Katzenberg reportedly re-iterated his stance that quality content will eventually gain notice for the platform.
Meanwhile, the service’s CEO, Meg Whitman, reportedly said, “We feel like we’ll get through this,” but urged her management staff to keep vigilant on controlling costs.
“We feel like that will get us through,” Whitman said. “But everyone needs to really think about, are we spending money like it’s our own?”
