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Jeffrey Katzenberg Blames Pandemic for Quibi’s Rough Start

Quibi, the streaming app he started with Meg Whitman a little more than a month ago.

Downloads have been anemic, despite a lineup that includes producers and stars like Jennifer Lopez, LeBron James, Idris Elba, Steven Spielberg and Chrissy Teigen.

The service, which offers entertainment and news programs in five- to 10-minute chunks, was designed to be watched on the go by people who are too busy to sit down and stream TV shows or movies. It came out when millions of people were not going anywhere because of stay-at-home orders across the country.

“I attribute everything that has gone wrong to coronavirus,” Mr. Katzenberg said in a video interview. “Everything. But we own it.”

Quibi fell out of the list of the 50 most downloaded free iPhone apps in the United States a week after it went live on April 6. It is now ranked No. 125, behind the game app Knock’em All and the language-learning app Duolingo, according to the analytics firm Sensor Tower.

Even with a free 90-day trial, the app has been installed by only 2.9 million customers, according to Sensor Tower. Quibi says the figure is more like 3.5 million. Of those who have installed the app, the company says 1.3 million are active users.

Mr. Katzenberg expressed disappointment with those numbers. “Is it the avalanche of people that we wanted and were going for out of launch?” he said. “The answer is no. It’s not up to what we wanted. It’s not close to what we wanted.”

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Credit…Quibi

Mr. Katzenberg, the onetime head of Walt Disney Studios and a founder of DreamWorks SKG, was asked if he wished he had not launched Quibi when he did.

“If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” he said. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.”

Mr. Katzenberg, 69, and Ms. Whitman, 63, the former Hewlett-Packard chief, raised nearly $1.8 billion from Hollywood studios and the Chinese e-commerce giant Alibaba for Quibi. They pitched it as an app designed to match how people consumed media now — on their phones during slow moments, while they commuted or waited in line. Conditions were much different on the day it came out.

“My hope, my belief was that there would still be many in-between moments while sheltering in place,” Mr. Katzenberg said. “There are still those moments, but it’s not the same. It’s out of sync.”

Many people who downloaded Quibi had a simple question: Why can’t I watch it on TV? In response, Mr. Katzenberg and Ms. Whitman have backpedaled on their original commitment to a smartphone-only app. This week, Quibi subscribers who have iPhones will be able to watch movies-in-chapters like “Most Dangerous Game” and shows like “Chrissy’s Court” on TV screens. (Android users will have to wait a few more weeks.)

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Credit…Darren Michaels/Quibi

Also coming soon, Mr. Katzenberg said: Quibi will be less walled off from the internet, and users will be able to share its content on social media platforms.

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“There are a whole bunch of things we have now seen in the product that we thought we got mostly right,” he said, “but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’”

Quibi placed a large bet on news programming for a lineup of shows from NBC, BBC, Telemundo and ESPN that it filed under the name Daily Essentials. Interest in those segments has been minimal.

“The Daily Essentials are not that essential,” Mr. Katzenberg quipped.

There have been other bumps in the last month.

A tech company, Eko, accuses Quibi of misappropriating trade secrets and infringing on the patent for the technology that allows viewers to shift seamlessly between horizontal and vertical viewing. The activist hedge fund Elliott Management has committed to funding a lawsuit filed by Eko.

A recent report found that Quibi had given away its customers’ email addresses without their knowledge. “As soon as we heard about it, we fixed it,” Mr. Katzenberg said.

Several executives, including Janice Min, left Quibi during its beta phase, and the company parted with another key team member in recent weeks: Megan Imbres, the top marketing executive, who declined to comment. Her interim replacement, Ann Daly, once the president of DreamWorks Animation, has worked with Mr. Katzenberg since 1997. He said the change had come about because of a “difference of opinion about what the strategy would be going forward.”

Until recently, Quibi promoted its service as a whole, rather than marketing any particular show. That strategy has started to change. On a recent installment of “The Last Dance,” the ESPN documentary series on the 1997-98 Chicago Bulls, Quibi ran a commercial for “Blackballed,” a docu-series about the National Basketball Association’s banning of the Los Angeles Clippers owner Donald Sterling. On the season finale of “Saturday Night Live” this past weekend, it advertised its reboot of the Comedy Central show “Reno 911!”

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Credit…Darko Sikman/Quibi

Quibi will enact the new strategy on a smaller scale, spending much less than the $470 million it had planned to devote to marketing in its first year, given that many of its potential customers are stuck at home.

“Until we are in an environment where we can get a return on our investment, we are going to keep our powder dry,” Mr. Katzenberg said.

As Zoom and TikTok top the app charts, Mr. Katzenberg and other Quibi executives have been working on reducing their projections from the seven million users and $250 million in subscriber revenue they had estimated for Quibi’s first year. With television and film production shut down almost entirely, Quibi has also decided to slow the pace of its new releases so it will be able to offer fresh content until the start of 2021.

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Credit…Quibi

Despite the difficult start, Mr. Katzenberg said he saw reasons for optimism. Eighty percent of Quibi’s viewers complete the episode they are watching, Mr. Katzenberg said. And once daily life returns to normal, he believes, people will go back to using their phones in ways that prompted him and his investors to bet on Quibi.

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When asked if the success of TikTok gave him pause, considering that it is also a platform built on short-form video, albeit of the user-generated variety, Mr. Katzenberg seemed momentarily steamed.

“That’s like comparing apples to submarines,” he said. “I don’t know what people are expecting from us. What did Netflix look like 30 days after it launched? To tell me about a company that has a billion users and is doing great in the past six weeks, I’m happy for them, but what the hell does it have to do with me?”

  • Updated April 11, 2020

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • When will this end?

      This is a difficult question, because a lot depends on how well the virus is contained. A better question might be: “How will we know when to reopen the country?” In an American Enterprise Institute report, Scott Gottlieb, Caitlin Rivers, Mark B. McClellan, Lauren Silvis and Crystal Watson staked out four goal posts for recovery: Hospitals in the state must be able to safely treat all patients requiring hospitalization, without resorting to crisis standards of care; the state needs to be able to at least test everyone who has symptoms; the state is able to conduct monitoring of confirmed cases and contacts; and there must be a sustained reduction in cases for at least 14 days.

    • How can I help?

      The Times Neediest Cases Fund has started a special campaign to help those who have been affected, which accepts donations here. Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities. More than 30,000 coronavirus-related GoFundMe fund-raisers have started in the past few weeks. (The sheer number of fund-raisers means more of them are likely to fail to meet their goal, though.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • How do I get tested?

      If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.

    • How does coronavirus spread?

      It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can be carried on tiny respiratory droplets that fall as they are coughed or sneezed out. It may also be transmitted when we touch a contaminated surface and then touch our face.

    • Is there a vaccine yet?

      No. Clinical trials are underway in the United States, China and Europe. But American officials and pharmaceutical executives have said that a vaccine remains at least 12 to 18 months away.

    • What makes this outbreak so different?

      Unlike the flu, there is no known treatment or vaccine, and little is known about this particular virus so far. It seems to be more lethal than the flu, but the numbers are still uncertain. And it hits the elderly and those with underlying conditions — not just those with respiratory diseases — particularly hard.

    • What if somebody in my family gets sick?

      If the family member doesn’t need hospitalization and can be cared for at home, you should help him or her with basic needs and monitor the symptoms, while also keeping as much distance as possible, according to guidelines issued by the C.D.C. If there’s space, the sick family member should stay in a separate room and use a separate bathroom. If masks are available, both the sick person and the caregiver should wear them when the caregiver enters the room. Make sure not to share any dishes or other household items and to regularly clean surfaces like counters, doorknobs, toilets and tables. Don’t forget to wash your hands frequently.

    • Should I stock up on groceries?

      Plan two weeks of meals if possible. But people should not hoard food or supplies. Despite the empty shelves, the supply chain remains strong. And remember to wipe the handle of the grocery cart with a disinfecting wipe and wash your hands as soon as you get home.

    • Can I go to the park?

      Yes, but make sure you keep six feet of distance between you and people who don’t live in your home. Even if you just hang out in a park, rather than go for a jog or a walk, getting some fresh air, and hopefully sunshine, is a good idea.

    • Should I pull my money from the markets?

      That’s not a good idea. Even if you’re retired, having a balanced portfolio of stocks and bonds so that your money keeps up with inflation, or even grows, makes sense. But retirees may want to think about having enough cash set aside for a year’s worth of living expenses and big payments needed over the next five years.

    • What should I do with my 401(k)?

      Watching your balance go up and down can be scary. You may be wondering if you should decrease your contributions — don’t! If your employer matches any part of your contributions, make sure you’re at least saving as much as you can to get that “free money.”

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