Six months after launching, Jeffrey Katzenberg’s short-form video streaming startup Quibi is now “exploring strategic options,” including a possible sale, according to the Wall Street Journal. In case you’re wondering, that’s not a good sign.

Quibi is still, presumably, sitting on a pile of cash. It has raised over $1.75 billion dollars. It still has all sorts of high profile Hollywood talent: Chance the Rapper, Jennifer Lopez, Liam Hemsworth, etc. It still has dozens of “quick bite” series (Quibi, get it?) whose episodes range from five to ten minutes in length. It even picked up a couple of Emmys last week.

But as Jimmy Kimmel noted on that same Emmys telecast, Quibi had “ten Emmy nominations this year, including outstanding short-form comedy or drama or dumbest thing ever to cost a billion dollars.” Ouch.

Quibi doesn’t give out paid subscriber numbers, but professionals estimate those numbers are profoundly underwhelming. As my friend and colleague Ray Wang of Constellation Research Inc. recently observed to the LA Times: “They built some great original content, but only attracting [an estimated] 1 million subscribers isn’t going to cut it when you need 40 or 50 million to count.”

So what happened? What went wrong? Well, according to Jeffrey Katzenberg: “I attribute everything that has gone wrong to coronavirus. Everything.” I think he means that we were all supposed to be watching Quibi on our phones on our commutes, but then those commutes went away. And as the commute goes, so goes Quibi.

Sorry, but I’m with Kimmel on this one: that is one of the dumbest things I’ve ever heard. All kinds of video streaming services are going through the roof right now, and according to my screen time dashboard I’m still hopelessly addicted to my phone. Just look at the success of TikTok if you think that short-form video doesn’t work during a pandemic. It doesn’t make any sense.

Quibi should have been a no-brainer. They had all the money and talent in the world. And it’s not like there were no problems before COVID — the app dropped out of the top 50 list a week after it went live on April 6th. But I honestly don’t think Quibi’s problem was its content. I think Quibi’s problem was its agility (or lack thereof). We all got hit with the pandemic at the same time, but some companies were able to think on our feet, and had the tools and wherewithal to pivot accordingly.

Case in point: Foxtel in Australia. Like the rest of cable TV, they are looking towards subscription-based streaming services to make up for the growing number of cord-cutters. Their first effort was Kayo, a well reviewed, immersive sports experience. But once COVID arrived in full force, they knew that their sports OTT service Kayo was going to take a hit, so they moved up their Netflix competitor Binge’s launch by six months! That’s truly remarkable – I’ve heard of big media launches getting delayed, but never pushed forward. Now their sports site is making a comeback and they’re crushing it on both fronts.

Over the summer you’ve heard me talk about all kinds of subscription companies doing amazing stuff with free trials, discounts and bonus features. COVID was clearly an all-hands on deck situation, and these companies responded with dexterity and creativity. Heck, some companies pivoted practically their entire value proposition. Resy, which provides back-end management for restaurants, gave all their clients two months free and then spun up a pick-up and delivery function.

And then there was Quibi. Quibi clearly didn’t have the ability to experiment very much. After launching on April 6th they extended their 90-day free trial to the end of the month (they eventually converted less than ten percent of those early sign-ups into paying subscribers), and after switching to a two-week free trial on May 1st they have not changed their offer since (basic plans start at $5 a month). Contrast that with Fender, who decided to open up their Fender Play free trial from 30 days to three months at the beginning of COVID, and wound up with a million new subscribers in six weeks. They’ve gone on to sell more guitars in 2020 than any other year in their history.

Smart subscription services know the importance of pricing and the need to experiment to get it just right. The days of launching and managing companies like they’re giant cruise ships are long gone. The launch of a subscription service is just the first step on a long journey of experimentation. You have to constantly adjust and refine in order to hit the right sweet spot for your customers and your market. You need to stay nimble, you need to adapt. Clearly, Quibi did not.

In the words of Bruce Lee: “If you put water into a cup, it becomes the cup…You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”

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For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

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