Quibi Needs a Better Pitch Than 'Rotate Your Phone'

(Bloomberg Opinion) -- Quibi, a new streaming-video brand, is getting sued over a “groundbreaking” feature of its app that another company claims Quibi stole — and now a big-time hedge fund is even joining the fight. But here’s the kicker: This supposed defining feature of the Quibi experience is something that its users probably don’t care all that much about.

The technology at the center of the lawsuit is something Quibi calls Turnstyle and its CEO Meg Whitman has described as “groundbreaking.” When a user is watching a show, they can alternate between holding the phone vertically or horizontally to have different views of the same scene. For example, in the beginning of the Quibi thriller “The Stranger” — don’t worry, no spoilers here — holding the phone in landscape mode would reveal a wider-angle shot of Clare, a taxi driver, as she sits beside her creepy passenger. Turning the phone to portrait mode instead gives a close-up view of Clare’s face, better conveying the fear she’s feeling in that moment. It kind of allows the viewer to be in the director’s seat.

A company called Eko (pronounced “echo”) claims that Quibi stole its trade secrets and is infringing on its patent for this rotating-video technology. Eko also creates interactive videos in which the viewer can help decide what happens next. Elliott Management Corp., the hedge fund of billionaire Paul Singer, is financing the lawsuit against Quibi through an agreement that would leave it with an equity stake in Eko, according to the Wall Street Journal. This is the same Wall Street heavyweight that has gone toe-to-toe with AT&T Inc., Twitter Inc. and even the country of Argentina — and now, of all companies, Quibi, the awkward new entrant to the streaming wars. Quibi has said the suit is without merit. 

It’s hard to know which way this case will go, but regardless, Quibi has other problems to worry about. Turnstyle is a neat feature that required a lot of thought. At the same time, subscribers using another video app wouldn’t necessarily miss it. In practice, it can also be tiring to keep turning your phone back and forth when you’re wanting to sit back and enjoy a quick show. Therein lies the issue with Quibi launching in the midst of a national quarantine.

Quibi was originally intended for on-the-go viewers riding the bus or waiting at the airport. Its name stands for “quick bites,” an allusion to the fact that all of its content is broken into episodes that are each seven to 10 minutes in length. That’s not as appealing to consumers who are currently stuck home with plenty of time for binge-watching, and Turnstyle is useless if you’re doing it on a TV.

When Quibi entered the market last month, it was also offering 90-day free trials. That means early July will be a crucial moment in revealing whether users simply took advantage of an overly generous trial in a moment of streaming desperation, or if Quibi has a viable business. There's also the question of whether there will even be anything left to watch on Quibi when those 90 days are up, with Hollywood in a production lull due to Covid-19. After the test period, the app will charge a monthly fee of $5, or $8 if you want to eliminate ads — and the top end of that range is more than Disney+. I suggested in a column Saturday that in order to fix the broken business model of streaming, the industry will need to embrace ads. Still, I’m not sure Quibi’s content rises to the level of being able to charge that much and serve ads.

There’s a lot of investor money riding on the startup, and faith in Quibi is partly a product of having two highly respected leaders who hail from Hollywood and Silicon Valley: Jeffrey Katzenberg, who once ran Walt Disney Studios and DreamWorks Animation, and Whitman, the former CEO of Hewlett-Packard. But if Turnstyle is Quibi’s differentiating feature, it turns out that it may not be so unique or even much of a feature at all. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.

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