Quibi is shutting down, citing low subscriptions amid COVID-19 pandemic

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FILE - This illustration photo shows a person about to use the Quibi app on a smart phone in Los Angeles, October 21, 2020.

A short six months after promising to revolutionize video viewing, short-form streaming service Quibi raised a white flag Wednesday and announced it was shutting down.

Founded by one-time Disney executive Jeffrey Katzenberg who convinced former E-bay CEO Meg Whitman to help lead the company, Quibi in a press release obtained by FOX Business, said it will "wind down its business operations and initiate a process to sell its assets."

The company took a hit after the onset of the COVID-19 pandemic when the market for potential viewers who are always on the go dissipated.

Quibi had raised $1 billion in funding from a wide range of major Hollywood film studios, TV companies, technology firms and banks. The remaining funds will be returned to investors, the release said.

The app provided short-form television content and boasted an all-star line-up for its programming, with programs featuring Hollywood A-listers Liam Hemsworth, Sophie Turner, Reese Witherspoon, Chrissy Teigen and more being featured in comedies, dramas and reality shows.

The decision to shut down may not come as a surprise as the company hired a restructuring firm to lay out several “strategic options” last month amid its struggles. The option to sell the company was on the table, according to the Wall Street Journal.

The review process was a sign of strain. The company was on pace to miss its initial paid subscriber target by a large margin, according to a person familiar with the matter.

The Quibi video app streams quick bites of content and bills itself as “the first entertainment platform designed specifically for your phone.”

This service was the latest streaming service to compete with the likes of rivals like YouTube, Netflix, Hulu and Amazon's Prime Video in the over-the-top media market, which is estimated to be worth $184 billion by 2027.

Quibi joins companies that are struggling to stay afloat during an ongoing pandemic that has globally shuttered economies.

Cineworld, for example, announced earlier this month that it was closing most of its theaters in the U.S. and U.K. in the wake of films like “The Batman,” “Dune,” “No Time to Die” and “Black Widow” pushing their release dates back to at least 2021.

AMC Theaters, the country’s largest exhibitor, said earlier this week that it may run out of cash by the end of the year if the situation doesn’t improve.

The Global Cinema Federation (GCF) notes that a major part of the problem is that New York City represents a key market to measure a new release’s success but remains a no-man’s-land when it comes to movie theaters.

“With New York’s theaters shuttered for nearly seven months and no indication of when they will be allowed to reopen, the studios that supply new movies have been reluctant to release their latest films to the point where almost no new major films will be released globally until 2021 and beyond," the GCF said. "Without new movies to play in our cinemas, many members of the global exhibition community will be forced to close their doors again. Many of these companies will not survive.”

More recently, amusement parks such as Disneyland are raring to reopen, but with a significantly smaller staff and budget.

Disney announced the layoff of 28,000 workers at its theme parks in Florida, which have reopened, and California, which has remained closed since March. Andrea Zinder, president of UFCW Local 324, said she expects about a quarter of her group's 3,000 members will be among those laid off and supports reopening sooner, especially because the company implemented safety measures such as making virus testing available to employees.

Now that state health officials announced strict new rules for reopening the parks, attractions spanning from Disneyland to Universal Studios are bracing for an even longer shutdown — and so are the surrounding communities lined with hotels, restaurants and shops that cater to visitors who no longer walk their streets.

The city of Anaheim, which is home to Disneyland, has slashed its general fund budget forecast by 30 percent because of plummeting hotel and other tax revenues usually generated by the resort area and a nearby convention center, said Mike Lyster, a city spokesman. Officials fear mom-and-pop shops along a boulevard normally packed with backpack-toting tourists wearing Disney's hallmark Mickey Mouse ears could wind up closing for good.

“We understand this is a pandemic-induced downturn. But what our concern is, without a recovery plan, it could easily become a prolonged economic downturn,” Lyster said.

The Associated Press and FOX Business contributed to this report.