Quibi seeks cost cuts as major ad sponsors pull back: report

Quibi
Quibi was targeting about 7 million paid subscribers in the first year and wanted to hit 16 million by year three, according to the report. (Quibi)

Quibi is reportedly looking to cut costs as its major advertising partners seek to defer payments after the new streaming service’s slower than expected launch.

According to the Wall Street Journal, Quibi advertisers including PepsiCo, Taco Bell, Anheuser-Busch and Walmart have asked that their payments be spread out over a longer time period. The changes have been requested due to Quibi’s relatively low viewership and coronavirus-related impacts on its business.

Earlier this month, the New York Times reported that Quibi has been installed by 3.5 million customers and that the service only has 1.3 million active users. Hollywood mogul Jeffrey Katzenberg, who founded the company with CEO Meg Whitman, blamed Quibi’s slow start on the coronavirus pandemic and said the early engagement figures are “not close to what we wanted.”

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Quibi was targeting about 7 million paid subscribers in the first year and wanted to hit 16 million by year three, according to the report.

RELATED: Quibi has 1.3M active users one month after launch

The low viewership totals have caused concerns that Quibi won’t be able to hit the guaranteed level of ad views it initially promised, the report said, which might mean the service will need to issue makegoods to its advertising partners.

Whitman reportedly told employees during a company meeting that Quibi’s slow start means the service will need to delay or postpone hiring, not backfill positions and minimize the number of contractors it brings on.

“We feel like that will get us through,” Whitman told employees, according to the report. “But everyone needs to really think about, are we spending money like it’s our own?”

Before its launch in early April, Quibi had raised $1.75 billion in funding and had booked $150 million in advertising deals.

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