Aaron Sorkin In, Steven Spielberg Out in Already Strange Awards Season

Getty Images

A Look at Who Would Want to Buy Quibi and for How Much

“Few companies feel threatened by Quibi right now, so I would not be surprised if it wasn’t picked up at all,” one analyst tells TheWrap

Who would want to buy a struggling streaming service — and for how much?

Those are the two pressing questions, after The Wall Street Journal reported that Quibi, the short-form and mobile-focused video startup from Jeffrey Katzenberg and Meg Whitman, is exploring “several strategic options,” including a potential sale.

Doug Clinton, managing partner at Loup Ventures, said a content company that doesn’t have an established streaming service would most likely target Quibi. But “it’s tough, because most of these [media] players have services out there.” Apple, which jumped into the content game last year and may be looking to expand its library, could be another logical buyer, he said. Other potential matches include Tubi, the ad-supported streaming service, and established entertainment firms aiming to bet more on streaming, like Viacom. At the same time, one analyst warned Quibi’s buyout prospects are low, at least for now, due to an ongoing legal battle over its app technology.

“Quibi has successfully launched a new business and pioneered a new form of storytelling and state-of-the-art platform,” A Quibi rep said when reached for comment by TheWrap. “Meg and Jeffrey are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees. We do not comment on rumor or speculation.”

The WSJ report came less than six months after the service launched in early April. While Quibi has a laundry list of Hollywood A-Listers behind it — with stars like Steven Spielberg, Jennifer Lopez, Kevin Hart, and LeBron James, among many others — subscribers haven’t lined up to add the service. Months after debuting, Quibi was on pace to hit less than 2 million subscribers by the end of the year — falling well short of its 7.4 million subscriber projection.

Clinton, during an interview with TheWrap this week, pointed to a few potential buyers: Viacom and Discovery Networks could be fits; Comcast/NBCUniversal, which recently launched its Peacock streaming service, is another possibility, Clinton said, because it could be looking to bolster its content library even more as it battles for new subscribers.

Omdia analyst Sarah Henschel, meanwhile, said she didn’t expect the market would be particularly ripe for Quibi, but offered her thoughts on where it would best fit.

“Quibi would be best suited either for a company that is behind on the direct-to-consumer launch landscape, or a company that needs to quickly acquire platform infrastructure,” Henschel said. “It could be valuable to growing AVOD platforms like Tubi or Amazon’s IMDb TV, for example. There could also be synergies for Sony who has yet to create a D2C product but has experience with Crackle.”

She added: “At the same time, few companies feel threatened by Quibi right now, so I would not be surprised if it wasn’t picked up at all.”

Services like Netflix, which already have a mountain of content commitments, would see little need for Quibi, according to the analysts. But Clinton said Apple, which is sitting on $193 billion in cash — and which also jumped into the content game last year with Apple TV+ — is the one big player that could be interested in Quibi.

Why would Apple want Quibi? Beyond adding to its content library, Clinton said this would also be a technology play for the tech giant, similar to its $3 billion purchase of Beats in 2014. The thinking goes Apple could fold Quibi’s app technology into its existing Apple TV app. On top of that, bringing Quibi’s executive team in-house would be a coup for anyone, Clinton said, despite the app’s missteps out of the gate.

“It’s a strong team, that’s one thing it has going for it,” Clinton said. “Jeffrey Katzenberg and Meg Whitman, you couldn’t dream up a better pair of people. The idea just didn’t work. But it doesn’t mean they couldn’t go somewhere else, re-tweak it, and turn it into something that’s a great acquisition.”

On the other hand, Quibi’s technology could also be the roadblock that gets in the way of any deal, according to Parks Associates Research Director Steve Nason. Quibi is currently locked into a courtroom battle with Eko, a New York-based digital video company.

At the center of the Eko-Quibi battle is Turnstyle, a feature on Quibi’s app that lets viewers seamlessly shift between vertical and landscape video. Eko claims this is a case of “theft” and accuses Quibi of stealing its technology, years after Eko executives met with Quibi founder Jeffrey Katzenberg. Quibi has said it did not steal Eko’s technology or trade secrets.

At any rate, Nason said Quibi is “not going anywhere because of the Eko active litigation.” If Quibi loses its battle, the company is “pretty much cooked,” he said — and a potential sale would vanish. That remains an “if” for now, though, and Nason said that assuming Quibi moves past its fight with Eko, it would still hold some appeal to potential buyers, even considering its rocky launch.

That’s because Quibi’s shows and movies aren’t the problems, he said, while noting Quibi recently grabbed two Emmys for “#FreeRayshawn,” a police drama starring Laurence Fishburne and Jasmine Cephas Jones. Marketing, Nason said, has been Quibi’s true stumbling block.

“Content is not the issue,” Nason said. “And that is half the battle.”

As for how much companies would be actually willing to pay for Quibi, that’s a tougher one for analysts to project. But matching the $1.75 billion in funding it launched with, they said, likely isn’t in the cards if a sale were to happen today.

“Investors would have to hope for something in the hundreds of millions [of dollars] range,” Clinton said. “I doubt you could get more than a billion now.”

Sean Burch