Roku buys short video service Quibi for tens of millions of dollars

Roku Developers confirmed acquisition of a startup Quibi without disclosing exact financial data. Roku has been granted the exclusive rights to most of the shows with famous actors.

Deadline has tentatively estimated the deal at close to $ 100 million. Roku shares are up 5% after the news of the purchase was published.

Roku got the rights to the entire Quibi library except for the daily news shows. The main benefit of the deal is the actors who starred in the films and series of the service:

• Idris Elba
• Kevin Hart
• Liam Hemsworth
• Anna Kendrick
• Nicole Richie
• Chrissy Teigen
• Lena Waite

Roku will release purchased content for free with ads on its channel. In addition, there will appear already filmed projects that did not appear on Quibi due to the rapid closure of the startup.

The Roku company makes money from the sale of video streaming devices and software. Now the company is developing an advertising direction. In the fourth quarter of last year, the audience of the Roku channel reached 61.8 million US residents. The channel publishes paid and free content.

Roku plans to change the format of the purchased content to longer episodes.

Quibi was founded by former Walt Disney Studios CEO and Dreamworks co-founder Jeffrey Katzenberg and Margaret Whitman, who led HP and eBay. The Quibi streaming service was launched on April 6, 2020. It featured films and TV series up to 10 minutes long. In addition, the developers have adapted the content for viewing both horizontally and vertically on a mobile phone screen.

Companies such as Disney, Sony Pictures, Warner Bros., Lionsgate, MGM, NBCUniversal, BBC Studios, Alibaba ($ 100 million), venture capital firms Madrone Capital Partners ($ 200 million) invested in the launch of Quibi $ 1.75 billion , Goldman Sachs banks ($ 50 million) and JPMorgan ($ 50 million), Google ($ 50 million). Startup founder Jeffrey Katzenberg invested $ 5.5 million and Margaret Whitman invested $ 10.5 million.

The launch of the startup coincided with the imposed quarantine in the United States and Canada. According to Sensor Tower, 910 thousand users have used the service. Of these, 92% did not renew the free trial subscription, which was initially given for three months, then the trial period was reduced to 14 days. After that, advertisers began to change the terms of contracts.

In October 2020, the founders published a letter to employees to close the startup and sell content and rights. The founders of the startup speculated that the service failed due to a lack of a strong initial idea and / or a bad launch time.

Video content on mobile devices is popular – about 10% of Netflix users watching content from mobile devices, YouTube traffic two years ago was about 40% of all mobile traffic, and quantity active TikTok users – 500 million people.