Make that $1.5 billion to be raised before Hollywood’s most debated startup rolls out the first of 7,000 episodic short videos beginning next April. That was the word Saturday from Quibi founder Jeffrey Katzenberg and CEO Meg Whitman in a joint appearance at the Produced By Conference.
Whitman and Katzenberg explicitly denied recent reports they would raise a second $1 billion, but also made it clear they’ll need more money before their audacious mobile video platform reaches the public.
“We’ve just raised $1 billion,” said Whitman, a former head of eBay and HP. “But we will go out to the market, in the fall or next spring. We don’t need the money right now, but we will need more to get to break even.”
“It’s not (going to be) a billion dollars, it’ll probably be half,” said Katzenberg, former CEO of DreamWorks Animation. “In the first year, we will spend $1 billion on content. That’s what we’re out there aggressively doing, but (we will spend it) also on the marketing of the platform as well as the content.”
The launch marketing campaign promises to be a mammoth $470 million in the company’s first year, Katzenberg said. Launch day is April 6, 2020, with the first offerings to be available in the United States and Canada through mobile apps. The marketing will support an initial release of dozens of shows, followed by a couple of dozen more new videos daily.
“Our view is we have to launch with a lot of this new form of content,” Whitman said. “You can’t go to Quibi on Day One and see 2.4 shows.”
Katzenberg added the company expects to roll out “25 or 26 pieces of content a day,” punctuated with biweekly releases of higher-profile series they call “lighthouse projects.”
The pair have been making frequent speeches and appearances at entertainment and tech conferences, trying to attract partners and investors, and build awareness of the project. Their Saturday appearance was particularly strategic, at a conference on the Warner Bros. studio lot, hosted by the Producers Guild of America, that annually draws around 1,000 Hollywood producers and industry types.
Just judging from various comments during and after the appearance, even the thoroughly insider audience had known little about Quibi’s business model (or even how to pronounce its name, a shortened version of “quick bites”). It suggests how much work Katzenberg and Whitman still have ahead of them.
The service will be both ad-supported and require a subscription of $4.99 a month (an ad-free version will cost $7.99 per month). Ads will be brief, 6- to 15-seconds long depending on the length of the video they’re attached to, and will total a relatively light 2.5 minutes per hour. Advertisers, Katzenberg said, were enthusiastic about the potential to make those ads episodic too, essentially telling a story in a progression of ads attached to each episode of a given series.
The business model certainly appealed to many at the conference, who seemingly all are shopping multiple projects to the proliferating online streaming platforms as well as traditional outlets such as the studio where the event was held.
Katzenberg said for green-lighted projects, the company will pay cost plus 20 percent up to $6 million per hour. At $100,000 per minute, that far eclipses production spending for episodic material on YouTube and other social-media platforms. Even a highly produced and ambitious influencer video on YouTube seldom costs more than $2,000 per minute to produce. And few feature big stars from traditional Hollywood (though many of the influencers have built giant audiences among their typically young followers).
By contrast, Quibi projects will feature lots of big Hollywood names in front of and behind the camera, collecting substantial checks for their work, plus the opportunity to resell the project elsewhere after a few years.
Those names include Oscar-winning multi-hyphenate Steven Soderbergh, one of Hollywood’s supreme experimentalists (his last Netflix film, High Flying Bird, was shot solely on older -model iPhones). Katzenberg briefly mentioned that Soderbergh and producing partner had just signed on to create a series for Quibi.
“He said, ‘All right, that’s a new type of content,'” Katzenberg said of Soderbergh (Sex, Lies and Videotape, Traffic, Erin Brockovich). “He and partner Michael Sugar are working on a green-lighted project.”
Part of what makes Quibi “a new type of content,” Katzenberg said, is the way the company is rethinking how people create and consume mobile video. The app-based approach will let them improve that often-mediocre viewing experience for users in a number of ways, he promised.
In part, that will be because of premium projects that are explicitly made for the medium. Filmmaker Antoine Fuqua (Training Day, The Equalizer movie) is finishing #Freerayshawn, a $15-million production that will cut a 2.5-hour long movie into 15 “chapters” for episodic release on Quibi.
The film, set in New Orleans, will star Stephen James and Laurence Fishburne. Katzenberg said the project “will have the dynamic of Fruitvale Station,” the Ryan Coogler debut film that centered around a lethal and actual confrontation between a Bay Area transit system police officer and a young African-American man.
“The way the model works, so when Antoine goes to produce show, there will be two shows,” said Katzenberg said. “The one for Quibi is ours for seven years. He’ll also cut together a long-form version. After two years, he owns it free and clear and can sell it anywhere in the world.”