Wolk’s Week In Review: Quibi calls it quits and Netflix takes a hit

TV[R]EV Week In Review
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Well-known industry analyst Alan Wolk is publishing his popular Week In Review columns first on FierceVideo every Friday. This means that FierceVideo readers are the first to get all Wolk's insights as they navigate the fast-moving television business.

Wolk's Week In Review

1. Quibi calls it quits

In a move that surprised no one, short form subscription service Quibi cashed in its ($2 billion worth of) chips just six months after its launch, adding another tombstone to the graveyard of failed subscription mobile video services.

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Why it matters

Quibi’s original sin, as it were, was that it was the solution to a problem no one had, except maybe 69-year-old Jeff Katzenberg, the founder of the service.

Or, as a circa 2012 internet meme would have put it “I wish there was some really good short form content I could watch on my phone but not my TV and pay $5 a month for...said no one ever.”

I will offer up two quotes from friends which serve to outline the other reasons the service was dead on arrival.

“Did they forget that Netflix has a working pause button?” Bingo. Yes, there are many times someone might want to watch something more than a homemade YouTube video while commuting or waiting to see the dentist. At which point they can call up whatever Netflix, Hulu or Amazon show they were watching and hit “pause” when they get to their destination. Because it isn’t as if Quibi shows are perfectly timed to match up with your commute, so does it matter if you hit pause on a 12-minute Quibi episode or a 50-minute Netflix episode?

"Do they think people only read short stories when they’re away from home?" Much in the way that people have no problem reading novels in “quick bites” over a period of several weeks, they have no problem watching longer TV shows in the same manner.

There were so many other problems with Quibi, including:

  • A very counterintuitive navigation system.
  • The lack of any sort of “Welcome to Quibi” intro menu that walked new users through setup and helped them to become familiar with the app and what it had to offer (not to mention collecting data on user preferences.)
  • The lack of any sort of hit or buzzworthy show.
  • The lack of any way to watch the app on an actual TV set at launch. (This was a huge one.)
  • The lack of any way to share a screen shot from the app
  • Their bizarre obsession with the ability to watch shows in portrait and landscape, another feature no one was asking for.

While it’s easy to blame the pandemic for Quibi’s problems, I doubt the app would have been successful in any circumstance.

What you need to do about it

If you’re planning to launch a subscription mobile-only video service: don’t.

If you’re launching any sort of video service: remember that people watch shows not concepts and have zero patience for confusing interfaces, so focus on finding a hit and making it easy for your users to find it too.

If you’re one of the people who worked at Quibi and needs to find a new job, good luck to you, and here’s hoping that all those leftover investor dollars bought you a really good severance package as well.

If you’re an analyst or trade press journalist, don’t gloat. (Tempting though it may be.)

2. Netflix takes a hit

Netflix missed its Q3 subscriber numbers and its stock took a hit. Most observers seemed to blame the launch of multiple other Flixes, plus the lasting economic fallout of the pandemic.

It’s not as if Netflix lost subscribers, they just didn’t gain as many as they’d hoped—they added 2.2 million subs where they had predicted 2.5 million, and analysts had predicted 3.3 million.

Why it matters

Netflix had a banner Q1 and Q2 this year, adding 15.8 million and 10.1 million subscribers respectively in each quarter, and that is why “only” 2.2 million new Q3 subscribers seemed like such a letdown.

There’s also the fact that the production shutdown caused by the pandemic hit Netflix pretty hard, given that they release all episodes of a series at once, and thus can’t do the drip, drip, drip episode release that networks with weekly schedules can do.

Then of course there was the launch of HBO Max and Peacock which likely took some viewers away; Peacock, in particular, because it is free and there are still something like 30 million unemployed people in the U.S.

Still, as noted above, 2.2 million new subs is nothing to sneeze at, especially given that much of that growth (60%) came from the Asia-Pacific region, where Netflix now has over 10% penetration in both Japan and South Korea,

That’s notable because Netflix is still the only US-based streaming service that has such a massive global presence (they are everywhere except China, North Korea and Syria) and it gives them a massive head start over their competitors.

What you need to do about it

If you’re an investor, don’t get freaked out. Q3, which is summer, is traditionally the slowest quarter for TV. There wasn’t much new programming and there were a lot of brand new bright shiny objects out there in the form of HBO Max and Peacock. Remember that next quarter, Netflix says it expects to add 6 million new subs which would give them 34 million new subs for the year, which is a huge lift.

If you’re determined to look for rain clouds, it will be interesting to see what Netflix’s churn rate is over the next year and if their all-at-once release schedule affects their ability to market new shows. Ditto their decision to cancel most shows after only two or three seasons--does that start to hurt their long term retention?

If you’re a reporter for mainstream publication, this does not mean Netflix is in trouble, nor does it mean that streaming is in trouble. It just means that Netflix had a slightly slower quarter than predicted, and given 2020, anything that comes anywhere close to whatever was predicted counts as a massive win.

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