Quibi, a major new Internet video project led by high-profile investors like Shari Redstone, Ari Emanuel and Brian Grazer, is struggling to get off the ground, sources familiar with the situation said.
Disappointed investors have issued a “severe credit default swap” — a warning that the venture will default in the short term — with a premium.
High-level money was committed to Quibi last week, according to two people familiar with the situation. The $200 million was supposed to be available via third parties, to be tapped for projects rather than being provided directly by Accel Partners, which led the fundraising.
The producers who held the funding, whose identities could not be learned, were unhappy when they learned how little they would get for the project. One of the sources said they were promised more than $100 million.
Quibi, which uses the acronym Q for “quality,” had originally been scheduled to launch in July 2019 but was delayed several times to the start of the second quarter in 2019. Despite the questions about its ownership, it appears to be the latest example of how the traditional TV model is being challenged by fresh digital rivals.
In a short time, competitors such as Netflix and Hulu have assembled vast libraries of content — as well as hordes of advertisers who want to be there. In turn, the big studios have boosted the quality of their offerings, which means smaller shows are not as appealing to advertisers.
Quibi, which was announced last June, was created as a platform for creators to easily create programming that they could sell around the world on a subscription basis. The investors wanted to create an alternative to the traditional TV model with an attractive offering: a service that costs much less than Netflix or Hulu.
In a June interview with the Los Angeles Times, Redstone, who is also executive chairman of CBS Corp. and Viacom, described the project as a “third platform” between Netflix and Hulu and said there were “fun things” in the works from well-known filmmakers.
Current executives at the project are largely from the digital world, but sources said that there were no digital experts on the team. As a result, some individuals who worked on the project are refusing to cooperate, with one person who participated saying he’s been kept out of the loop for months.
“I feel misled,” said the person, who asked not to be identified to avoid causing trouble with the investors.