Video Streaming: Industry Insights and Quibi Case Study
Feb 2 2021
Over the past year, people have had to find ways to fill the time they spend at home. Many people now regularly turn to video streaming options after finishing their remote work for the day. What was already an increasingly popular pastime—around 41% of Canadians used video streaming services on a daily basis before the pandemic —has become even more popular due to COVID-19. In this article, we analyze the Canadian streaming market, investigate students’ streaming habits, and conduct a case study on Quibi, a streaming service that launched last year, to extract lessons for the industry.
The video streaming industry has experienced significant growth in recent years that is expected to continue going forward. According to Statista, the industry in Canada is projected to have revenues of $1.19 billion in 2020, and a projected compounded annual growth rate of 7.5% over the next five years . To capitalize on the industry’s growth, new streaming services like Disney+ have entered the market and have had varying degrees of success in capturing market share against the major players led by Netflix and Amazon Prime Video . Although it has become common for users to subscribe to multiple services, many have had to make difficult decisions about which services to subscribe to and which to leave behind.
We conducted a survey of over 160 university students from across Canada to better understand how their consumption habits have changed with the fragmentation of the streaming industry. We found that virtually all students are subscribed to at least one streaming service (95%) and a majority (60%) to more than one. An overwhelming 90% of students have a Netflix subscription with no other services coming close to this rate of adoption (figure 1).
The flood of new video streaming services has led to a saturated market: 81% of students are satisfied with the streaming options currently available to them and only 20% are willing to spend an additional $7 monthly on streaming services. Given that the cheapest service on the market is currently $8 a month (figure 2), new streaming services would need to undercut their competitors or face headwinds in attracting an audience.
New streaming services must pair a large offering of high-quality content with competitive prices and an effective advertising campaign to acquire a critical mass of users in the saturated market. Once obtained, services can grow organically by leveraging social circles in streaming decisions: 80% of students talk about streaming content with their friends/family each month and most students’ viewing preferences are influenced by their peers. Failing to do so puts a streaming service at risk of never acquiring enough subscribers to be profitable.
Quibi Case Study
An example of a video streaming service that failed to acquire that critical mass of users is Quibi. Featuring short-form content that was exclusively 10 minutes or less, Quibi raised an impressive $1.75 billion from investors. Despite the significant investment, Quibi shut down only 6 months after launch and recently sold its content to streaming service Roku for under $100 million . We conducted research, surveyed students from across Canada and held focus groups to understand what caused Quibi’s failure, specifically among university students, and what industry players can learn from it.
Reasons Quibi Failed: The Student Perspective
Problems with the 10-minute format
Quibi’s short-form videos were advertised as the “middle ground” between social media and existing video streaming platforms. However, our focus groups revealed that this middle-ground did not exist: a common theme among students was that ten minutes is long enough to stream content on a different platform (ex. Netflix), but also short enough to scroll through social media. As such, Quibi’s content length put it in direct competition with both streaming and social media platforms, making it harder to win consumers’ attention.
Students also had reservations towards the 10-minute format. Although it might have been convenient in practice, 68% of students felt that this format brought very little to no value, 63% thought it would make content less engaging and 54% worried that it would weaken the plot. This overwhelmingly poor impression dissuaded many students from ever downloading the app.
Limited viewing opportunities
Quibi content was initially only viewable through their mobile app; it could not be streamed on a computer or TV . This eliminated the two most popular ways students access streaming services (figure 3) and made watching a Quibi show an individual experience. Considering that most students prefer watching videos physically with others, this strategy was catastrophic: over 60% of students would not even consider downloading Quibi because of its mobile-only viewing.
Although Quibi spent $63 million on advertising, it was ineffective among students . Only a quarter of students could recall seeing a Quibi ad, and less than 30% knew Quibi was a video streaming app. The issue was likely the ads themselves: even after showing multiple to our focus groups, participants still could not identify what Quibi was and even fewer felt motivated to download the app. Quibi’s inability to effectively inform and excite consumers about their product hindered its ability to capture market share.
Furthermore, Quibi imposed barriers on ways existing subscribers could attract new ones. Almost all of our survey respondents (98%) said that friends influence their viewing habits. Quibi limited this critical social aspect of the viewing experience by preventing users from taking screenshots and sharing content to other apps. In doing so, Quibi made it difficult for existing users to introduce their friends to Quibi, missing out on the opportunity to reach a larger audience.
While Quibi’s product and execution had flaws, streaming services can learn from their mistakes.
Lessons learned from Quibi
Understand and be responsive to the target market
Quibi’s product launch demonstrates the importance of understanding the target market and consumer demands. While some products such as the iPhone are able to define what the customer wants, most do not have that power and must change course to satisfy the consumer. Had Quibi pivoted sooner in response to customer demands, they might have been able to increase the value add of their service and gain market share.
Sell what makes you different (on Instagram and YouTube)
Quibi’s ads failed to generate interest among the small segment of students that was open to their products because they did not effectively convey Quibi’s advantages over other streaming options. Generally, students are value-conscious and want to know what differentiates a product. Without compelling reasons, most will simply defer to the most popular option. When considering where to place streaming ads, our research indicated that those placed on Instagram and YouTube would generate the most interest for streaming service (figure 2).
Leverage existing users by providing social experiences
Students are heavily influenced by their friends, and streaming services can leverage their existing user base to spread awareness of their content. Streaming services should allow users to watch shows virtually with friends using platforms like Netflix Party, and seamlessly integrate with social media to provide existing subscribers the tools to bring in new users. In the context of the COVID-19 pandemic, enabling users to be connected online becomes even more important.
Looking to the future, the streaming industry will experience continued growth and stronger competition. This will inevitably make it more difficult for new services to acquire users. While Quibi’s flawed concept, marketing and execution led to its failure, other companies do not have to repeat their mistakes. By listening to consumer demands, marketing their key differences, and providing ways for subscribers to be connected online, streaming services can succeed in gaining market share.
JED Consulting is Canada's largest student-run consulting firm and has helped businesses grow with McGill's best and brightest for over a decade. JED provides a variety of consulting services tailored to each client, with areas of expertise including market research, competitor analysis, digital strategy and student marketing. Past clients range from Montreal Startups such as Sonder and Sportlogiq to major Canadian corporations, including Bell Media and Cineplex Entertainment. JED iQ is the research branch of JED Consulting and provides insights on a variety of issues and trends occurring both in Montreal and globally.
Appendix A: Survey demographics data
Total people surveyed: 167
Gender: 88 males, 78 females, 1 prefered not to say
Age: 4% 17 or younger, 35% 18-19, 56% 20-21, 5% 22-24