Startups Entertainment Media/Telecom

Streaming Service Quibi Seeks Up to $1 Billion in New Funding

Quibi, the mobile video streaming service headed by Hollywood and tech veterans Jeffrey Katzenberg and Meg Whitman, made headlines last year when it announced $1 billion in funding before it even launched a product. Now, with the service’s launch still many months away, Quibi is gearing up to raise even more.

The company is currently planning to raise up to an additional $1 billion to help fund the streaming service, according to four people familiar with the matter. Mr. Katzenberg has said he expects the service to launch next year. Quibi, in its initial financing, raised money from a variety of investors including film studios such as Warner Bros, tech companies like Alibaba and Silicon Valley firms including Madrone Capital Partners.

The Takeaway
• New funding effort comes well ahead of service’s launch
• Company already raised $1 billion last year
• Quibi will launch in highly competitive market for streaming services

It’s unclear whether Quibi plans to tap the same pool of investors for this round of funding. The company is also looking to private equity firms for funds, according to one of the people. A source close to Quibi said the company hasn't made a final decision about how much to raise or when it will start the process, but it could be as early as this fall.

Mr. Katzenberg, previously the CEO of Dreamworks Animation, is already renowned in Hollywood circles for his ability to raise financing for his entertainment projects. But as a Hollywood veteran, he doesn’t have a track record building a direct-to-consumer entertainment business. The streaming service is slated to feature all original content formatted for mobile devices. Series and movies are broken up into bite-sized increments (the company’s name is a combination of the words “Quick Bites.”)

Mr. Katzenberg, who is overseeing Quibi’s content side, has struck deals with a number of high profile names including Jason Blum, who produced the horror-comedy film “Get Out” and the director of “The Shape of Water,” Guillermo Del Toro.

Quibi’s quest for more capital so soon after its first round could be related to the sizable budgets it is committing to programming. Executives have been signing deals for shows with budgets as high as $5 million per hour on content, which surpasses the money spent on many broadcast and cable shows

But Quibi, which will have both ad-based and subscription tiers, is also planning to launch its untested streaming service (and still-unknown brand name) in an extremely competitive market for streaming services. In the next 18 months, companies including Disney, AT&T’s WarnerMedia and NBCUniversal are all planning to launch services that feature original content as well as access to their libraries of movies and TV shows.

Quibi is planning to launch its untested service in an extremely competitive market for streaming services.

In March, Apple announced plans to roll out a streaming service, called Apple TV+ with original content from high-profile figures such as Oprah and Reese Witherspoon. Hulu, which is now fully controlled by Disney, is growing its subscriber base at a fast clip. Meanwhile, Netflix continues to spend heavily on original programming in a bid to expand its worldwide subscriber base.

Quibi executives including Mr. Katzenberg and Ms. Whitman have argued that their aim with bite-sized content is to offer entertainment for people during brief periods of downtime—for example, while they’re waiting for the bus. They say that puts some distance between Quibi and the fray of major media companies jostling for position in the in-home entertainment business.

But, as a new service, the company will still be under pressure to make its case to consumers and market the service heavily, which will be costly. 

Tom Dotan joined the Information in 2014 covering the media, advertising and streaming video businesses. He is based in San Francisco and can be found on Twitter at @cityofthetown.
Jessica Toonkel is a New York-based reporter for The Information covering media and how the industry is being disrupted by technology. Before that, she spent seven years at Reuters covering a range of topics including media, mergers and acquisitions and financial services. She can be found on Twitter @jtoonkel.