- PepsiCo, Yum Brands' Taco Bell, AB InBev and Walmart are among the blue-chip advertising partners trying to renegotiate deal terms with mobile streamer Quibi, The Wall Street Journal reported, citing people familiar with the matter. The companies are pushing to defer payments or, in some cases, adjust their billing schedules, the report said.
- Some advertisers are concerned about the platform failing to gain significant viewership since its April 6 launch. Quibi, which offers ad-supported and ad-free subscription tiers — both paid — has seen its app downloaded 4.2 million times, along with signing up 1.5 million users to its free 90-day trial. Quibi's contract terms guarantee a certain level of ad viewership over a period of time, but some are worried it won't hit those benchmarks and will need to provide advertisers additional airtime to close the gap, per the Journal.
- The coronavirus pandemic has also led marketers to pull back on spending, impacting Quibi. Founder Jeffrey Katzenberg told The New York Times in a recent interview that he blamed "everything" that had gone wrong with Quibi's launch on the coronavirus. But the Journal reports that, at internal meetings, Quibi executives also pointed to dependence on scripted content, along with inactive users and disinterested viewers, as problems to address.
One of the biggest stories in the ramp-up to Quibi's debut was the sizable amount of upfront ad commitments —around $150 million — the platform was able to secure from a large roster of marketers, including 10 marquee partners. The hefty buy-in was a sign that the service, led by Hollywood veteran Katzenberg and CEO Meg Whitman, could garner more traction than similar bets on the mobile streaming space that didn't take off, such as Verizon's failed go90 app.
Many of Quibi's top partners looking to adjust terms of their ad deals — and reportedly growing concerned over viewership — a little over a month after launch adds to a heap of troubles that have weighed on the service, which was already contending with an overcrowded streaming space and now has to grapple with significant headwinds particular to the coronavirus.
Quibi isn't alone among publishers feeling pressure from brands that have grown more budget-conscious in the wake of the pandemic. One-third of advertisers recently surveyed by Advertiser Perceptions said they were planning to spend less on the TV upfronts this season, for instance. Digital platforms like Twitter and Facebook have also warned of a hit to revenue if advertiser demand continues to fall.
In other ways, Quibi's problems appear platform-specific. One of the big selling points of the app was its mega line-up of Hollywood talent appearing in exclusive TV series or movies broken up into "quick bites" — i.e., a Quibi — of content that could be viewed in under 10 minutes, all on-the-go. However, the Journal's report indicates that leaning too hard into scripted programming has turned into an issue for the service, which competes not only with streamers like Netflix, Amazon Prime Video and Disney+, but also video-focused social media apps such as TikTok and Instagram.
As a point of differentiation from the former camp, Quibi initially had a hard line on being mobile-only, a quality that helped attract advertisers chasing smartphone-savvy viewers in the Gen Z and millennial camps. But shelter-in-place orders have cut off several of Quibi's key viewing occasions, such as commutes or downtime waiting in lines.
With people still stuck at home and more likely to consume content on a larger screen than their phone, Quibi has quickly corrected course. The platform this week started supporting casting to TVs via Apple's AirPlay, and is "working hard" on enabling similar capabilities for Google's Chromecast, according to The Verge.
Still, the impact on Quibi has been clear, and mirrors how other companies are tightening their belts amid the pandemic. During an internal Q-and-A discussion reported by the Journal, CEO Whitman said Quibi is enacting several cost-cutting measures, such as slowing hiring initiatives and cutting down on the number of contractors it uses. The platform's head of brand and content marketing, Megan Imbres, left in late April.