Yes, IP matters

 Albert Burneko (late of Deadspin) has a wonderfully snarky rant on the demise of Quibi.

Quibi, the subscription digital streaming platform that aired five-to-10-minute TV episodes exclusively on mobile devices, died yesterday. Personally I like to imagine that it happened because Quibi gained sentience just long enough to hear a one-sentence description of itself, and then immediately lowered itself into a vat of molten steel like the Terminator. 

The official story is a lot more boring, though not without its charms. The brainchild of megalomaniacal former Disney and DreamWorks head Jeffrey Katzenberg and serial executive-class remora and wildly failed gubernatorial candidate Meg Whitman, Quibi burned through, at a conservative estimate, somewhere between $1 billion and $1.75 billion in investment or seed money or whatever over the slightly more than two years of its existence, only for its creators to discover within three months of its actual product launch that, whoops, no one, anywhere, wanted to pay money to watch seven-minute TV episodes on a phone. Here is a fun detail from the Wall Street Journal‘s story about the company’s demise:

    The decision to hire the reorganization firm came after starting a process to sell the company, The Wall Street Journal reported. Quibi pitched suitors including Comcast Corp.’s NBCUniversal on a sale, according to people familiar with the matter, but would-be buyers were put off by the fact that Quibi doesn’t own many of the shows it puts on its platform.

This touches on one of those ideas that has been lurking in the background of a lot of the posts we’ve done over the years. There is a growing disconnect between the way business analysts and accountants value businesses and the investors and business journalists see them.

One of the many ways that Quibi pushed the business plan of Netflix past the point of parody was with its approach to intellectual property. NF spends a substantial chuck of its budget for originals on shows it has little or no ownership of. This fact isn’t hidden but it’s been downplayed by the company and virtually ignored by the financial press.

Quibi took this to the next level and purchased almost no rights to the content it produced. Once again, the press and the investors paid no attention – based on the “rules” (I’m sorry but I can’t bring myself to type the word without scare quotes) of the new economy, these things don’t matter – but when serious professionals tried to value the company, the fact that it had spent $1.75 billion dollars and had nothing to show for it but a crappy brand was something they found difficult to overlook.