I work in this industry and generally agree with your assessment.

However a few things, the general industry perspective went like this:

1. David Katzenberg and Meg Whitman were creating a consumer service targeting a demographic they don't fit in a field they've not worked in. (Consumer apps for a younger demographic)

2. They got 1.8 Billion in funding. For fuck's sake you should get one breakout hit piece of content from that. (Note Apple is struggling a bit with this one too). With the funding, hype and content they've spent on the expectations are going to be pretty damn astronomical, they brought high expectations on themselves.

3. Their entire premise was based on this concept of quick bites of content. With an almost 2 billion dollar war chest the right thing to do would have been to test this theory maybe? Roll out a single show first, backfilled with some news? Get some feedback maybe?

Quibi is led by some serious heavy hitters, so its not spoken much out loud but I think a lot of folks in the industry felt this play was based mostly on hubris and now there's a certain sense of schadenfreude as they start to flail.

Apple, Quibi, Amazon are trying to plan the perfect breakout show.

It doesn’t work like that. A lot of the networks’s and Netflix’s breakout shows were not planned to be great. That’s why they just greenlight a bunch of random pilots and see what sticks to the wall.

It’s extremely hard to create hits.

> It doesn’t work like that. A lot of the networks’s and Netflix’s breakout shows were not planned to be great. That’s why they just greenlight a bunch of random pilots and see what sticks to the wall.

There's a great interview with Bryan Cranston, where he's talking about the origins of "Breaking Bad."

Basically AMC wanted to compete with HBO, but they didn't have HBO money. So they gave the creators a limited budget but a lot more creative freedom. AMC basically created an environment where creative people who had a passion project could get it off the ground if they were willing to work for less money.

In particular, Vince Gilligan had to go to the mat for Bryan Cranston, because AMC wanted Gilligan to cast someone else.

This may not be relevant at all to the topic at hand, but they also made concessions for their budget (which HBO likely does, too). The pilot was written for East LA where nearby JPL was where his former founders worked. They shot the series in New Mexico because of the film subsidies. Many shows may not have been green-lit without subsidies.

> It doesn’t work like that. A lot of the networks’s and Netflix’s breakout shows were not planned to be great.

That might be true for a lot of breakout shows, but not all of them. House of Cards was arguably Netflix' first breakout show, and Netflix outbid other networks for House of Cards when they were just starting to focus on original programming. That was always painted in showbiz media as a very deliberate plan based on Netflix' data about their users' preferences.

We know now that they didn’t really have that data at the time. They just heard Fincher was available and bought his idea unseen for a lot of money so no one else could get to propose to him.

And as soon as they got data involved, the plot quality decreased immensely. By season 3, most people had given up on the show already.

Netflix pinning a lot on winning a bidding war for Fincher sound suspiciously like investors placing massively outsized bets on the Dreamworks/Disney guy with the startup savvy CEO being the Next Big Thing in digital media...

House of Cards was an adaptation of a widely acclaimed British TV show, directed by one of the best Hollywood directors, starring an A-list actor. Plus it probably didn't cost 1.8 billion.

Yep, entirely different risk profile. Netflix already had a brand, platform, and customers, and they already offered TV shows and weren't experimenting with a new format. The House of Cards risk was all in execution, not brand, concept, product, talent, etc.

Actually they are all based on the book by Michael Dobbs (1989) who was the chief of staff for Margaret Thatcher for a few years. I heard him at a book show say he wrote it almost by accident as therapy on a vacation after getting squeezed out of politics.

The difference is that the sample size for Fincher is a lot larger - 9 of his 10 films have grossed >100mil, so we have very good confidence on his hit rate.

Startup Savvy CEOs have 2, maybe 3 successful companies under their belt, so it's harder to judge how much of their success is due to repeatable factors.

Katzenberg revived Disney and cofounded Dreamworks so he's not exactly short of samples of his ability to produce hit movies. Also getting the scaleup eBay CEO to sort out the internet bit was a bonus...

House of cards also had the benefit of having a 2 time Oscar winner on the cast.

HBO seems to be able to consistently churn out hits, and not just "hits" but cultural touchtones that ripple throughout pop-culture.

But they also have a history of original programming that dates back to the early 90s (and earlier). They've had time to perfect those ripples.

Even their first original show Oz (1997) [1] was good. It was clearly experimental and low budget (it's set almost entirely inside a prison so needs very few sets, props, costumes, etc.), but designed around that limitation to focus on the writing and characters. Netflix tried a similar strategy with one of their first original series, Orange Is The New Black.

[1] https://en.wikipedia.org/wiki/Oz_(TV_series)

More accurately, their first one-hour drama. They produced original content as early as 1976, not including sports programming or comedy showcases.

There's a not-very visible but nonetheless real amount of planning and "portfolio management" that goes on behind the scenes into choosing which ostensibly "random pilots" to produce. Yes it's kind of a "reptilian" strategy by design (as opposed to "mammalian", focus-on-one-baby-at-a-time), but there is a lot of careful selection done, even if the results look random. More and more, this is a data/ML-driven space, and less and less reliant on human expertise (with human insights but also human blindspots and biases).

Absolutely, but that process is absolutely not data driven.

“Feeling” about a show, and connections to the people running are the two major factors driving those decisions.

Data driven shows tend to be forgettable and ignored by newer generations, who are the ones holding their parents’s credit cards, and therefore, a major audience for hit shows.

The trailer for Apple's new Foundation show reeked of this. All of their heavily marketed content (See, Servant, Greyhound) look like they had the same person doing the trailers.

I love foundation and that looked like some generic high budget sci-fi with no indication of what actually makes the story interesting

I don't really think Amazon should be included with the other 2. I can't think of anything they've made that was "planned to be a breakout show" and didn't succeed. Their pilot program that they used to run might've been the reason for that. They're also really quick to give up on series that don't do well (which is pretty similar to Netflix).

The Grand Tour?

The Grand Tour maybe hasn't become the cultural touchstone that Top Gear was, but i'm fairly certain it's still getting a ton of views. Every top gear fan i know watches it. It's not getting the buzz a new show would because it's essentially just more Top Gear, but it's definitely being watched.

I think it was pretty successful. I guarantee it got a lot of uk top gear fans subscribed to prime, it did for me.

The Grand Tour and other related shows are the only thing keeping my Prime subscription going.

>Apple, Quibi, Amazon are trying to plan the perfect breakout show.

Apple is making a series out of Isaac Asimov's Foundation books. [0] :-D

[0] https://www.youtube.com/watch?v=xgbPSA94Rqg

I'm sure a lot of us are looking forward to it -- it's good source material, but there's no guarantee that they will pull it off well, or that even if they do a great job, that it will be a hit.

Its pretty terrible source material if your trying to make a mainstream hit.

The foundation is great, but its not your traditional laser-battle big budget mainstrean action-sf thingy.

Yeah the thesis of the books (well until the Mule) is that no one person makes a big difference and it's all due to larger historical forces. Although it'd be hilarious if we follow a hero only for the show to conclude with "welp guess macro effects in galactic trade are really what caused the Empire to fall"

Kinda off-topic, but I recently read The Last Astronaut[1], and got the sense that it could make a great movie adaptation, which I almost never get from sci-fi books.

[1] https://www.goodreads.com/book/show/40881567-the-last-astron...

Yes but every network in existence does it and is forced into that paradigm. Every premium channel on cable (HBO/Showtime/Starz etc) have had to have a new breakout hit pretty much every year with a pretty small slate of new content - and Quibi has been able to combine this with some formats that actually should work (News, short form comedy etc).

I think the biggest issue is that there is a deluge of news and short form comedy, and it's free and good quality with a very tolerable amount of advertising on YouTube, Snapchat, Facebook, Instagram, Twitter, TikTok, television, etc, etc.

To succeed in short video they needed something that was beyond a bombshell, something desperately sought after but not forthcoming. Highly polished DeepFake Beatles concerts, with new music written by Paul McCartney. I don't see how you succeed charging for something that qualitatively better than YouTibe. You'd have to at least have new interactive elements (choose your own adventure? I don't know, but something cool).

That's what I find striking. With all their experience & expertise, the major studios spend a tremendous amount of money and consistently produce a surprising number of failures. Personally, I like the wider seeding creatively in general (as you describe with Netflix.)

And those are just the failures you see! Friends in the industry tell me there are many more failures behind the scenes where shows can get arbitrarily far down the production pipeline only for studio execs to come in and scrap the whole thing.

We're not so different from those 1000 monkeys writing shakespeare :)

I have zero idea about Netflix, Amazon, or Disney, but I hear the high turnover in execs at the big network TV studios cause this. The story I often hear is the "new guys" are terratorial and kill off projects of their predecessors so their own projects can succeed.

Not to be trite, but this was the whole biz plan of Huffington Post, Buzzfeed, et al. The algos will generate the hits. Unfortunately, it doesn't seem to work that way. Algos will identify the hits earlier, but they won't "make" them for you.

Yes it's hard. But they got 1.8 billions in funding, and they are trying to get a foot in a crowded space, so expectations are high for them to deliver something. You can't stay long in the TV business with just a couple million paying subscribers

Amazon already created a pretty perfect show in The Marvelous Mrs. Maisel (89% on Rotten Tomatoes). That is going to be really hard for them to top.

They should pack up because Amazon made a super hero show and got 89% on rotten tomatoes.

Wait till you see what Disney is offering... you are going to cancel Prime.

I don't subscribe to prime for the video service, but they've got a couple good shows. My kids like Disney+ but I would cancel Disney+ over HBO any day.

Does Disney have any good comedy series?

Amazon does have breakout shows. They have won the last 2 emmy for best actress in a comedy TV series.

> Amazon does have breakout shows. They have won the last 2 emmy for best actress in a comedy TV series.

I’m not disputing either of your presented facts, per se, but the first of those is absolutely not implied by the second.

So much so, in fact, that I have to think it was sarcasm.

Their mistake is they're trying to do something that all the other established players could essentially replicate overnight. Their big innovation is the shows are shorter? On top of it, their execution is poor. They put out the standard shows you would see anywhere else except edited so that a single episode turns into a half dozen shorter ones. They pretty much positioned themselves out in no man's land between Netflix and YouTube. They really seem oblivious to what's already out there, who their competition is and where they fit in.

I think if Quibi really wanted to succeed they should have partnered with YouTubers and TikTokers instead of big celebrities. They could spend more on production instead of paying just for the celebrities to be there. And the marketing is free because every online content creator is going to promote their own show.

I don't think their product is really that viable. The amount of setup, process, work, materials and money it takes to produce a 10 minute clip is just about the same amount it takes to produce a 30 minute episode.

I've enjoyed some short-form episodic content on Amazon before, but it always left me feeling short-changed, and wishing the episodes were 30 minutes. It was too quick to go through the entire series and then it's done, I have to search for more content that is high quality, which is few and far between. Maybe it's for people with ADD who can't follow a plot longer than 10 minutes long?

Quibi is relying on a gimmick, and one that isn't even difficult to copy and has been done before. I've so far not heard of any reason that would compel me to spend my time on their site when there's so much other content out there.

I'm also not sure why anyone would want Meg Whitman on board at a company like this, unless she's somehow responsible for bringing some of that 1.8 Billion in funding, and even then she should only be on the board, not in the C suite.

I remember the early days of podcasts going commercial the group think was that they should be short. I believe companies like Discovery put out podcasts that were maybe 4 minutes tops. That thinking was just as oblivious.

I remember Merlin Mann had a blog post a decade or so ago where he considered Garrison Keillor's The Writer's Almanac the perfect podcast in that each episode was five minutes and it came out daily.

I never understood the fascination with Meg Whitman. The PayPal acquisition did not generate nearly as much value as it could and eBay is terrible, could have been what Amazon is today. I see Meg as greatly benefitting from a rising tide, not great leadership. Maybe her lieutenants have a different take but this is what I see from the outside.

> I see Meg as greatly benefitting from a rising tide, not great leadership. Maybe her lieutenants have a different take but this is what I see from the outside.

I worked at HPE, when Whitman was CEO.

The impression I got, was that she's a bit of a wizard when it comes to finance.

For instance, the organization that I was a part of, we lost a pile of money. But despite that, HPE was able to sell the org off to SuSE.

IE, if Whitman wasn't a wizard, the entire venture may have been a 100% loss. But she was able to flip that organization to another buyer.

IMHO That does’t paint a picture of a tech leader and innovator — maybe a fantastic CFO.

"For All Mankind" is an absolutely amazing show from Apple. Alternate history of if Russia got to the moon first. Lots of historical footage (sometimes augmented). I loved watching it. Maybe too niche for a breakout hit but it is extremely good.

That's easy to say in hindsight, but I think if the pandemic wouldn't really happen there's a good chance their conversion would be even higher. Their whole business model is meant for consumers who are on the go with short time bursts, which is exactly the opposite of what we have today.

It very well could be that their shortage of content wouldn't have been as big of a deal because their ideal users weren't binging on their stuff, just watching while on a train or lunch break.

I'm not saying they haven't made mistakes, but it does feel like this aspect is missing in a lot of the bandwagon criticisms of the service.

This does not resonate with me- you have masses of people who now have tons of free time on their hands, and in general the trend is towards shorter formats of entertainment- especially for the demographic they are targeting.

You are really telling me that people are too busy watching 2 hour documentaries or reading books to load up Quibi for a quick hit? I don't buy this at all. We don't still have lunch breaks?

I know this is kind of the "insider narrative" on this (I actually bought my house from someone fairly high up that relocated to the west coast to work there) but this really rings hollow. After reading some of Katzenburg's comments in an article a few months ago where he said "I blame everything that has gone wrong on Coronavirus. Everything." This is not a successful approach to thinking about why your product isn't getting the market fit you thought it would. Then throw in some highly annoyed comments when it was retorted that Tik Tok is thriving with "its comparing apples to submarines." With thinking like that I don't think they stand a chance really.

Personally I can not imagine a better time to launch a video platform than the onset of a pandemic where people are stuck inside with little else to do aside from consume content.

If the content was good folks would watch it, Whether in quick bites or not.

Even then, adjusting to the new reality and repackaging 10 minute episodes of a show into 30-60 minute episodes could likely be done in an editors suite in a few weeks.

> If the content was good folks would watch it, Whether in quick bites or not.

Agreed. "Dr. Horrible's Sing-Along Blog" anyone?

> with short time bursts

The problem is that the short time bursts are highly variable, but they specifically target 10 minutes. That's why people scroll through twitter or instagram, it fills the void, no matter how long it is.

Right, that was my intuition as well. Ten minutes is still too long for the use case that they’re targeting, of people on the go who want to fill in time looking at their phone. A ten-minute short still requires a level of concentration (and absence of interruptions) not suited for that scenario. Social media is still a lot better for that, as is tiktok’s far lower video length.

And, yes, I know it sounds kind of bizarre to ridicule a ten-minute short as “too long”. Fortunately, the public is (still, for now) absolutely willing to watch productions that take a bigger time and attention investment. It’s just, they want to watch it at home, possibly with others, on a bigscreen. Quibi deliberately avoided that with the “mobile only” constraint that they’re now reversing.

Edit: sorry for overusing “still”.

I feel like their target demographic had to be based on public-transit commuters.

Who else has: * 10 minute+ but less than 22-30 minute "full TV show" long uninterrupted breaks * Where their phone is the primary connectivity device * Predictably available?

If I'm at home, I have the PC, the TV, any number of better ways to enjoy content. If I'm in a car I'm driving, I can't watch video. If I'm on the toilet or a lunch break, I may not have 10 uninterrupted minutes.

I wonder if in 20 years, we'll see it on self-driving cars as a similar fit. "Your estimated trip time is 17 minutes, here are some recommendations of programming for the dashboard screen."

Thanks for the industry insight. 1 and 2 make sense from an outsider's POV.

For 3, what would you envision for this test, other than normal market research / focus groups that they likely conducted? Surely you shouldn't launch the Quibi brand with just one show if the goal is a full-fledged streaming platform.

Lessons from segway.

The recent major articles about Quibi being a disaster are not been about conversion rate, but about its huge costs combined with questionable proposition (which was particularly affected by quarantine life changes), and its poor performance on app store charts:

https://www.vulture.com/2020/07/is-anyone-watching-quibi.htm...

> As of early July, over 5 million phones had downloaded the Quibi app. Of those, 1.5 million had registered to use it, and this was with Quibi offering a three-month free trial and doing saturation marketing. (When it paused the marketing during the Black Lives Matter protests, Quibi’s App Store ranking fell to No. 1,477.) In light of its disappointing user numbers, Quibi’s advertisers have reportedly asked to renegotiate their deals. The company was forced to go into capital-conservation mode. Executives took a 10 percent pay cut.

Also, 8% does not sound like a good conversion rate for the entertainment industry, even ignoring the disparity between subscription revenue and the hundreds of millions already spent for content:

> *Meanwhile, the 90-day free trials will begin expiring this month. The industry conversion rate from a free trial to a paid subscription hovers below 33 percent. According to research firm Parks Associates, if that holds true for Quibi, it could mean less than 500,000 people would be watching a network that spent hundreds of millions of dollars on brand-new premium content.

I was dubious about Quibi when I spent months seeing the occasional advertisement and still having not the slightest idea what Quibi is or why I would want it. I figured it was some flash in the pan social network that would shortly be dead. I didn't even know it was a video service until I saw its financial distress covered on HN.

“Build it and they will come” jumps to mind here.

Taking the canoe over your Waterfall planning.

Also most of the stuff that they greenlit (and paid a lot for) was older content that had been shopped around for quite awhile with no takers.

> they’re about to crash and burn, because of an 8% conversion?

They are crashing and burning because they have fewer than 100k users after nearly 4 months and aside from piling a lot more money into advertising they have no momentum, no brand awareness, and no properties anyone outside a few people know.

> Comparing them to Disney is ridiculous too, it’s Disney!

It's not about 10% versus 8%, it's about 10s of millions of paying users versus 10s of thousands. Obviously Disney had a huge head start, that's the whole point. The two services cost the same amount, what attracts new users? Content. For my $7, I'm going to sign up for the service with content I know I'll like. That's the same choice millions of people made here.

Did the user have to provide a credit card, are a lot of these 8% maybe just folks who forgot to unsubscribe?

I feel like this conversion rate thing really "depends".

On iOS this was just in-app purchase, so you agree to start paying in 3 months when you sign up. So you never really have to manually type your credit card but you had to remember to unsubscribe within your iTunes subscriptions.

same on google play. and as far as i'm aware, those two are the only platforms that Quibi is offered on. Cancelling my trial before i was billed was really simple on Google Play, but i did have to remember to do it.

it's also interesting to note that the only way to get a quibi subscription is via the two major app stores, which both take a 30% cut. So unlike netflix, apple, disney, etc who all allow purchasing via lower-fee methods, quibi is paying 30% for every subscriber.

And unsubscribing via iOS is surprisingly challenging.

I find your statement surprising. The ease of changing or removing a subscription is the largest reason I would subscribe through iOS to anything. Is there something specific to Quibi?

No, but finding where are you unsubscribe an iOS is not the most intuitive thing.

Luckily they send those emails to you that remind you that you’re about to start getting charged.

Indeed. I'd been paying for HBO through Apple since they launched HBONow. When we got AT&T fiber, they bundled in HBOMax for free. AT&T made it annoyingly difficult to sign up for the free service. And it took a while to figure out how to unsubscribe from HBO in iTunes.

I've just got into the habit of unsubscribing every time I start a free trial on iOS. I just tap settings -> iCloud account -> subscriptions and then cancel the sub I just started. It gives me access throughout the trial and if I go to use it and it blocks me because the subscription ended I take measure of my own sadness to decide I want to pay.

I saw a few tweets saying 'remember to cancel Quibi', so I guess it's auto renew by default? Most streaming services are like this

Probably in app subscription in the future agreement

On the other hand, Disney has mountains of cash behind them while Quibi is VC-funded and VCs typically want to see results to decide whether to continue or cut their losses. Disney can get away with a terrible conversion rate forever while a startup can run out of funding very quickly.

It’s crazy that a VC would fund Quibi. Producing that content is expensive and their margins will never justify that type of equity funding.

I actually don’t know if 8% is a good or bad conversion rate for free trial to month 1 paid subscriber for streaming services, or even just subscription services. In online marketing world, yes 8% is terrific, since just CTRs stand around 1%. So, just curious what baseline you’re referencing to conclude 8% is good.

Edit - some cursory googling suggests free trial to paid conversion for subscription services are generally somewhere in the 10-25% range. So I don’t think 8% is good, maybe mediocre. Note this is distinguished from lower rates associated with freemium model products(e.g., spotify). Will try to dig up some better refs to link out to.

I wonder what portion of that 8% are basically accidental paying customers at the moment.

I think it’s a mistake to treat this like a conversion experiment. Trialers at the very first possible release of a service, heavily incentivized by a very lengthy free trial, are not similar to a steady state flow of trialers experiencing more transient promos or test experiences, which is a situation where conversion modeling makes sense.

This is not a funnel experiment. This is a huge pile of people specifically seeking out a special event at a launch, so the composition and intent of that is expected to be way, way, way more favorable than general steady state.

It’s like if concert tickets went on sale and everyone is camping in tents to buy them on the first day, and then when the booth opens and people listen to the free sample, 90% of them just pack up and go home.

That’s a much, much worse situation than if only 1/10 people who see an ad for the album choose to buy it on iTunes, whole different ballgame, funnel composition, intent model, everything.

10% conversion on a massive launch promo is drastic failure. This is not at all like getting 10% conversion on a funnel with low intent.

I guess that's fair enough, it is admittedly difficult to separate that I am personally not interested in Quibi vs I don't see why it could succeed.

I guess the two things it boils down to is their place in the market, and who their customers are?

- I think Netflix speaks for itself. - Disney+/Hulu has the power of the catalog, generations of IP, and creatives to leverage it. - HBO is HBO if ATT can manage to keep it that way. - Amazon has quite a few good things going on imo, and it helps a lot that its just attached to prime.

So now with these players, we're very much at the point of marginal overload. Why do I want your service? What do you have that no one else does?

So I guess what I'm really interested in is who that 8% is? In what ways does Quibi work, because I already feel like I have an idea/opinion of how it doesn't work.

If adoption and renewal keep going this way Quibi will have 8000 users.

Friends and family maybe 1,000. Forgetful people not uninstalling after the trial probably 6000. Of those 1000 users probably varied. Some expect something. Some want every streaming service. Some want 10 minute videos. Some never unsubscribe.

Also at $6.99 Disney is practically "dumping" their valuable content on the market. How is a newcomer supposed to compete with that? Talk about barriers to entry.

Netflix is getting $12.99 from me and it doesn't look like a bargain compared to Disney.

Another point. Especially with these content based services, it's all about the next piece of content you can provide.

For example, if Dave Chapelle signed an exclusive deal with Quibi, then all of a sudden those 92% that didn't want to come back will come back in droves.

Quibi isn't a lost cause, they set up the infrastructure and are just getting started on releasing content. Everything depends on if they can find their must-see-tv.

Dave Chapelle would require 500 million to leave netflix.

1.7 billion sounds like a lot but netflix spends more per year on programming only.

8% is terrible.

Imagine what the Customer acquisition cost ($10-$20?), that means the customer conversion cost is $125-$250.

With a $5-$8 trial you can see how the economics of this simply do not work.

Agree seems like there is disproportionate dislike here for quibi. How many other billion dollar startups eat the shitter without this much hub-bub?

However it is fair to hate on the founder jeffrey shrekzenburg. I know some folks who work at quibi and say this dude is insufferable. Probably not as insane, but stephen wolfram levels of dooshbaggery. Dictator type who thinks is shit is golden. Turns out he made a 1.5 billion dollar piece of shit and from what i hear, he has finally accepted that maybe he isnt the greatest thing ever.

Also if you like shrek, he made shrek/dreamworks. And short little farquad is basically jaffrey katzenburg from what i've heard

Doesn't 'Meg' no more wfh or daycare but will install a private daycare for herself Whittman co ceo this company?

Wasn’t that Marissa Mayer?