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Jan 14, 2020

Quibi spending more than a billion wading into streaming wars. Luring subscribers will be key.

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According to CEO Meg Whitman, the streaming service's tech and talent will draw them in.

These days, we’ve all got a Las Vegas buffet of subscription streaming services to pick from. One new one called Quibi — short for quick bites — launches in April and is only for your phone. 

Quibi was founded by former Disney executive and producer Jeffrey Katzenberg, and Meg Whitman is the CEO. They gave a big presentation about the service last week at CES in Las Vegas. They’ve raised more than $1 billion and signed up a lot of big-name talent to create all new shows and movies. But no video will be longer than 10 minutes at a time. 

I spoke to Whitman at CES about Quibi’s secret sauce: tech. I asked her to tell me how it works. The following is an edited transcript of our conversation.

Meg Whitman: The first thing is, people are watching a lot of videos on their mobile phone today, but it’s an uneven experience. Sometimes, if you’re holding the phone in portrait, it’s a little postage-stamp size, then you turn it horizontally, it’s got big black lines. Some content is only available in portrait, some is only available in landscape. We said for our use case, on- the-go viewing, we have to be able to have seamless portrait-to-landscape rotation with full-screen video. We figured out that it had to really be what we call script-to-screen innovation, because the creators have to film a little bit differently. They have to look at a shot and they have to say, “How will that shot look in portrait? How will it look in landscape?” And then we make two edits of the movie — you could watch the whole movie in portrait or the whole movie and landscape, but the gyroscope in your phone knows which way you’re holding the phone so we can show you the right edit of the movie. We thought, “All right, we’ll have the edit of the portrait, the edit of the landscape, and we were going to run them both in the background on your phone.” Except for then, we figured out it would eat way too much bandwidth and way too much battery life, so we said, “OK, got any other ideas on how we can do this?” Ultimately, it came down to a compression technology that when you are watching in portrait, your landscape version is compressed. This has never been done before. We have patents on it, and that’s why the experience is so seamless and so engrossing. Then we shot, obviously, to the aspect ratio of the phone.

Molly Wood: Is there price pressure? I feel like Disney Plus is putting a lot of price pressure on a lot of services, and you’re launching at $5 a month with ads, $8 a month without. I mean, are they going to have to come down?

Whitman: I don’t know. It’s $4.99 a month with ads, at $7.99 a month without ads. Remember, we’re going after a millennial audience — 18 to 44. We think that most will pick the ad-supported version because it’s a very light ad load. It’s only 2.5 minutes per hour of watching, which is much less than prime time TV, which is 17.5 minutes of advertising for every hour that you watch. So $4.99 we think is a good value for this premium content on their mobile phone. For those people who really don’t want advertising, we felt like we should offer an ad-free version at $7.99.

Wood: Do you expect that most of the revenue will be generated by the subscription?

Whitman: We think that that will be the base case. We’ll see how this works out. I think the majority will be subscription revenue, but we’ll see.

Wood: What made you land on this idea of 10 minutes? For a long time in video, it was two minutes. YouTube went to 10 minutes for mid-roll [ads that appear in the middle of content] purposes. Is it for mid-roll purposes?

Whitman: Part of this is judgment. It turns out that the average session length for the population worldwide, except for China, is actually six minutes. Think about it, to be spending five hours a day on your phone, you’re picking up that phone a lot of different times, and the average session length is six minutes. It’s a little bit longer in China. So we said six minutes. Maybe our Quibis — we call our content Quibis — should be between five and a maximum of 10 [minutes].

Wood: Can I watch on my TV? 

Whitman: At launch, you will be able to Chromecast [to] your TV. But we at launch will not have a unique Apple TV or a Chrome Google TV app per se. Because really, we think this is mobile only. When you think back to this portrait-to-landscape, seamless full-screen video, part of the joy of this is you get on the bus holding your phone in portrait, then you watch on the bus in horizontal. Then you get off and you go back to portrait. Most people’s TVs are not going to go back and forth. We think this is an interesting new way to view and is uniquely suited to the mobile phone.

Wood: What about the content race? I’ve been in content a long time. It can be a little bit of a money pit. There’s no built-in library necessarily or archive that you’re working from. How do you win that battle?

Whitman: Well, you’re right. … We will be the first streaming services that launches without a library. Think about it, you can’t take a 60-minute television show and just chop it up into six 10-minute segments. This all has to be shot for turnstile, which is new, and it has to be written if it’s a movie in chapters. It’s all new, which we think is actually exciting and fun. But we have to make a lot of content, because you can’t come to Quibi and see two or three things, you have to feel like there’s a world of richness and a lot of genres. We have quite a unique content strategy. We have maybe invested significantly in content. This is all about finding the great stories, attaching the great actors and actresses to it and getting them excited about doing something entirely new. We will launch within the first year 175 original shows. Every day, we will produce and commission from our partners three hours of new, fresh content every single day, which is 35% more than a network does in prime time. There’s a lot of fresh daily new content on the on the app, which I think people will keep coming back for that, at least that’s what we hope.

Wood: I am listening to this as a person who does a daily show and I’m thinking, either you’re geniuses or you’re crazy.

Whitman: Here’s the thing: Remember, we don’t make any content ourselves. You make your own content.

Wood: Sure, but you’ve got to pay for that. That’s way harder than what I do.

Whitman: We have to pay for it, but we are leveraging the expertise of our creators and studios. We’re leveraging for our daily essentials, where we curate news and sports and weather and lifestyle. We’re leveraging the infrastructure of our excellent partners. So that makes it a bit easier, but but we have a budget, and we’ve planned for that. We think that will be the right budget for the first year.

Wood: Talk to me a little bit about the content. Do you anticipate that people will make shorter versions of things that they maybe, five years later turn into a longer project?

Whitman: Let me give you an analogy in another medium that you will totally get. Do you remember “The Da Vinci Code”? “The Da Vinci Code” is 464 pages and 105 chapters. Every chapter in “The Da Vinci Code” is five pages, because 18 years ago, Dan Brown said, “People are not reading for 45 minutes.” Now they’re probably not even reading for 30. And he said, “If you’ve got five minutes, I want you to read one chapter. If you’ve got 10 minutes, I want you to read two chapters. But the thing I do not want you to do is stop in the middle of a chapter.” Nothing was lesser about “The Da Vinci Code” other than the length of its chapter. We like to say our movies, nothing’s lesser about the movies other than the chapterized way we deliver them. And then we have, as I described, our daily essentials, which we hope will create the daily consumption habit. We’re going to curate 25 daily shows every single day, from talk shows to horoscope to news to weather to sports, etc. The other kind of content we have is this unscripted, episodic and documentary shows. A perfect example there is Chrissy Teigen is doing a show. Her favorite show, as it turns out, is “Judge Judy.” She came to us and said, “I want to do ‘Chrissy’s Court.'” And the tagline is “No claim is too small.” Each claim will be 10 minutes or eight minutes, and she’s super excited about it. By the way, you can’t in our movies, you got to watch them, the episodes, in particular order, but “Chrissy’s Court” you could watch in any order, because they’re not related to each other. They’re episodic.

Wood: You really have snackable and binge covered. Why are you here? Considering your background, what drew you to this?

Whitman: I’ve been friends with Jeffrey [Katzenberg] for 30 years. We worked at The Walt Disney Co. together back in the day, and then when I was at eBay, I sat on his DreamWorks Animation board. Jeffrey and I’ve been friends for a long time. When he heard I was stepping down from HP after six and a half years — I told the board I would stay five years — he called me and he said, “Would you ever consider coming down and being the CEO of Quibi?” I said, “Well, I don’t know.” He came up and had dinner, and at the end of dinner — three-hour dinner — I said, “This is a really good idea. It’s a really good idea.” What I look for in new consumer tech businesses is are the trends right? Trends are absolutely right. Is the market large? The market’s gigantic. Are you changing consumer behavior or are you just taking people to a premium level? Is there what I call a sustainable competitive advantage? Meaning, if we’re successful and everyone else comes in, how do we continue to win?

Wood: Is that through the intellectual property?

Whitman: It’s actually largely through our relationships with our studios. It is first-mover advantage for sure. We have had to learn how to create this platform, and we’ve had to teach creators how to do it. We think we have a lot of barriers to entry, because we will be out first by a pretty wide margin.

Wood: That seems like such a surprising thing to say, considering the streaming marketplace. 

Whitman: But remember, this is such a different thing. Yes, it’s streaming. But it’s a different use case, it’s a different way to shoot. It’s completely different, as I said, script-to-screen innovation.

Wood: Give us the details about the launch, if you would.

Whitman: We launch on April 6, but you don’t have to wait till then to get involved. You can go to Quibi.com and become a Quibi insider. We’ll tell you about news and new shows and milestones and what the tech looks like. We’ll let you know on April 6 when you can download the app from either the Apple App Store or Google Play Store.

Wood: And then we find out if it’s crazy or genius.

Whitman: Yes.

Quibi CEO Meg Whitman and founder Jeffrey Katzenberg speak about their short-form video streaming service Jan. 8 at CES. (Robyn Beck/AFP via Getty Images)

Related links: More insight from Molly Wood

Chrissy Teigen is the best thing on the internet right now, and that all by itself is a pretty good draw, but whether it’s a $5-a-month draw remains to be seen.

The tech business site called The Information is behind a very expensive paywall, but it did an analysis of how much money Quibi has raised — $1.4 billion — and how much it’s spending to commission all this new content — a suggested $1.5 billion. It also said that the service seems to be banking on signing up a ton of subscribers right out of the gate. The story quoted Hollywood insiders who said part of the reason established entertainment players, like Viacom, Comcast Universal and Lionsgate, put money into Quibi originally was basically a just-in-case bet. But most people don’t expect it to do much. 

There’s a lot about this that feels like a hard sell — the price, the mobile-only thing. I’m at the very tippy-top of the range she describes as millennial, and I like my big screen internet TV a lot. That said, you will not find a better saleswoman than Meg Whitman. You talk to her about Quibi for 15 minutes, and you sit in the room thinking she’s solved every single challenge that exists in streaming media. And then you leave the room and you go “Wait, what about data caps?” If anybody can sell this thing, it’s her.

The team

Molly Wood Host
Jody Becker Interim Senior Producer
Stephanie Hughes Producer

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