In 2006, I spent a summer living in America. In between long days at the beach and road trips up and down the east coast, I spent a lot of time watching DVDs. These DVDs were delivered in thin red envelopes, which you’d then reseal for the return trip.
This was the early incarnation of Netflix, before anyone had heard of streaming.
These days, though, streaming is so normal that we’ve entered the age of the so-called “streaming wars.” Netflix, Hulu and Prime Video are streaming veterans. Last year, Apple TV+ and Disney Plus entered the battlefield, and recently some new contenders have shown up.
HBO Max, launched in the US just this week, is one of these.
The platform offers a deep library, with Friends, Game of Thrones, Westworld, The Sopranos, The Wire, and Rick and Morty all on tap, just to name a few.
But the launch has stirred up a few issues; HBO Max is unavailable on Roku and Amazon’s Fire TV services, and there are apparently no deals in place to rectify this situation.
Additionally, the platform is one of the more expensive streaming platforms to launch, at US$15 a month, although HBO’s 30 million (or so) existing subscribers get access for free.
With millions of existing subscribers and tried-and-true content, HBO Max has a nice head start, which could be the difference when entering the streaming wars.
You see, another streaming service — Quibi — launched in early April.
Quibi — which is a portmanteau of “quick bites” — is a short-form video platform founded in 2018 by legendary Hollywood film producer Jeffrey Katzenberg, with former eBay and Hewlett Packard chief executive Meg Whitman coming on as CEO.
Last year, literally months before it launched, Katzenberg was quoted as saying: “Five years from now ... if we were successful, there will have been the era of movies, the era of television and the era of Quibi. What Google is to search, Quibi will be to short-form video.”
At that point, the platform was already worth more than US$1 billion.
To Quibi’s investors, at least, short-form video made sense, especially for a generation of people tied to their phones, happy to take in a “quick bite” while waiting for the bus.
By the time it launched, it had raised US$1.75 billion, had advertising partners such as Google, Walmart, and PepsiCo on board, and a lineup of content featuring or created by Jennifer Lopez, Reese Witherspoon, Will Smith, Ridley Scott, Steven Spielberg, Chrissy Teigen, Bill Murray, LeBron James, and Guillermo del Toro, just to name a few.
But does Quibi — a mobile-only platform — make sense for a period of time when so many of its intended users are at home, with a TV at hand, not looking for snackable content so much as something they can lose themselves in? Not so much, it seems.
Quibi has reportedly already lost nearly two-thirds of its users, which is pretty stupefying, given the platform offers a 90-day free trial. It says it has 1.3 million active users, but when you compare that to the 10 million users Disney Plus reportedly had the day after launch, it’s paltry.
It would be unfair to write Quibi off so early in the piece.
Katzenberg has told the New York Times that Quibi is rethinking or slowing its strategy for the current environment, and will slow down the pace of new releases so it has fresh content to last the year. (It’s safe to assume not many streaming companies are filming right now.)
But Quibi’s failure to launch, despite hundreds of millions of dollars behind it, does suggest that it’s hard enough to win a battle, let alone the (streaming) wars.
The Spaceship Universe Portfolio invests in Amazon, Apple and Disney at the time of writing.
The Spaceship Index Portfolio invests in Amazon, Apple, Disney and Netflix at the time of writing.
Important! We’re sharing with you our thoughts on these companies for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
