Quibi/Netflix: quarantine and chill  | Financial Times

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What better time to start a new streaming service than in the middle of a global crisis that has forced millions of people to hunker down at home? Quibi, from Jeffrey Katzenberg and former eBay boss Meg Whitman, is due to launch on April 6. Demand for online entertainment is soaring. But what use are “quick bite” five to 10-minute videos for people on the go when no one is going anywhere?

This is not a situation that anyone could have foreseen. But Quibi’s second problem is of its own making. At $4.99, its cheapest payment option is more affordable than Netflix but the same monthly price as Apple TV+, which offers long TV series without advertising and is free for one year with the purchase of Apple hardware. Quibi viewers who do not want to see adverts can pay $7.99. This is $1 per month more than rival Disney+. Quibi lacks the name recognition that Apple and Disney boast. It is also unlikely to rival either service on popular shows. 

The coronavirus crisis, and attendant home schooling, has added new viewers to streaming services. In Europe, Amazon, Apple and Netflix are cutting video quality to avoid congestion. But competition is fierce. Alongside existing services, HBO Max and NBC’s Peacock are due to launch this year. Free, user-generated content on YouTube and TikTok is more popular than ever. 

Of all the streaming services, Netflix remains the one to beat. In the last reported quarter it added 8.8m paying subscribers. Multiple users can access one subscriber’s account, meaning viewership numbers may have increased four times as much. An early lead means competitors are struggling to match the size of the US company’s back catalogue. This will be increasingly important if the pandemic disrupts production of new shows.

Netflix has its own problems. Making shows is expensive but rivalry means it cannot ramp up subscription rates too high. Plus it is having trouble adding new subscribers in the US — a more profitable market than the less wealthy countries it now targets for growth. But a few recent rapid price rises in the past year should temper the spread of its negative cash flow. In 2020, it hopes to knock hundreds of millions of dollars off last year’s $3.3bn burn.

 Chart showing global streaming revenues against number of users

Quibi is well funded — with a reported $1.75bn to spend. It may even have a monster show up its sleeve that becomes required viewing. But isolated viewers stuck at home want escapism. Ten minutes is not long enough. 

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