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Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Quibi, the mobile-only video subscription streaming service, is shutting down, The Wall Street Journal reports. The company raised a whopping $1.75 billion to get the app off the ground from Alibaba, as well as Hollywood behemoths like Walt Disney Company, NBCUniversal and AT&T's WarnerMedia.

Why it matters: The company has struggled to hit its subscriber growth targets amid the global pandemic. Sources tell Axios Quibi was running out of cash.

Details: Quibi founder Jeffrey Katzenberg called investors Wednesday to tell them he is shutting the service down, the Journal reports.

  • The company had hired a restructuring firm to evaluate its options in recent weeks, per The Journal. One of the recommendations firm was to close operations.
  • The Information reported on Tuesday that strategy meetings have recently been been cancelled.

The big picture: The app, which launched in April, struggled to attract subscribers amid a streaming boom during the COVID-19 pandemic.

  • Third-party analytics companies reported over the summer that the app only attracted a few million downloads. The company never officially confirmed any paid subscriber numbers, but Katzenberg told The New York Times in May that it saw 3.5 million downloads. Other analytics companies reported that Quibi struggled to convert most of its free trial subscribers to paid subscribers.
  • It also faced a heated patent lawsuit funded by a powerful activist investor over what it considered its flagship technology.
  • Quibi was created to provide short-form video to young users via mobile. Most videos were 7 to 10 minutes in length, but shot both vertically and horizontally. In recent months the company had been experimenting with putting some of that programming on TV screens.

Between the lines: The company's business model was contingent on having enough subscribers and eyeballs on its content to sell lucrative ads — a similar model to the video subscription streaming service Hulu.

  • Axios reported in March that the company sold out its first year in ads — $150 million in revenue  — ahead of its April 6 launch. That number is fixed via pre-sold ad agreements with 10 companies.
  • Ad partners include big-name marketers like Progressive, Discover, General Mills, Procter & Gamble, AB InBev, Taco Bell, Pepsi, T-Mobile, Google and Walmart.
  • Prior to the service launching, Quibi CEO Meg Whitman told Axios in an interview that she expected the majority of subscribers to chose Quibi's ad-supported plan.

Our thought bubble: Quibi argued that months of stay-at-home lockdowns pushed consumers to TV streaming services and away from mobile-only video. But TikTok, a Chinese-owned short-form video app that's mobile-only, has gained massive traction in that same time, even while facing major regulatory headwinds.

  • Quibi's problem was that it raised a lot of money and couldn't live up to the hype. Its programming never produced any smash hits. And consumers never really embraced its "turnstyle" format, that it billed as revolutionary.

Jeffrey Katzenberg is an investor in Axios.

Go deeper

Nov 19, 2020 - Technology

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Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

Facebook says it removed more than 265,000 pieces of content from Facebook and Instagram in the U.S. for violating its content policies on voter interference leading up to the election.

Why it matters: The company was much more proactive this election cycle than last in taking down and labeling content attempting to disrupt the election.

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COVID-19 is the macro horror of our lifetimes, and has destroyed or severely damaged countless businesses. But, like with most horribles, it also has created some opportunities.

Driving the news: Merck this morning announced an agreement to buy OncoImmune, a Maryland-based biotech that showed promising late-stage clinical results for a therapy that treats severe and critical coronavirus cases.

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Biden's openings for tech progress

Photo illustration: Eniola Odetunde/Axios. Photo: Win McNamee/Getty Images 

Item No. 1 on President-elect Joe Biden's day-one tech agenda, controlling the flood of misinformation online, offers no fast fixes — but other tech issues facing the new administration hold out opportunities for quick action and concrete progress.

What to watch: Closing the digital divide will be a high priority, as the pandemic has exposed how many Americans still lack reliable in-home internet connections and the devices needed to work and learn remotely.

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