Power

Quibi’s failure is a bad omen for T-Mobile’s video plans

The mobile carrier once heralded Quibi as "the next big thing" — and hasn't had much luck with other video initiatives, either.

Quibi CEO Meg Whitman and T-Mobile CEO Mike Sievert

Better days: T-Mobile CEO Mike Sievert joined Quibi CEO Meg Whitman on stage at CES this year.

Photo: Janko Roettgers/Protocol

Quibi's shutdown announcement this week has been widely panned as the inevitable end of a service that never made much sense to begin with, much less during the pandemic. However, the company's demise is also a notable failure for T-Mobile, which was one of Quibi's biggest boosters, and even footed the bill for some of its customers as part of a "Quibi on Us" promotion.

"Quibi has been a strong partner with a unique mobile-first vision, and we're sorry to hear they will be winding down operations," a spokesperson told Protocol on Thursday. "Obviously, we will continue to monitor and ensure our customers with Quibi on Us are supported during this period and through any next steps needed."

T-Mobile's embrace of Quibi hasn't been the telco's only miscalculation in the media and entertainment space. It also comes just as T-Mobile appears to gear up for another video service announcement next week.

When incoming T-Mobile CEO Mike Sievert joined Quibi executives on stage at CES this year, he was full of praise about the mobile video service. "Quibi's the next big thing, and we're delighted to be a part of it," Sievert told a few dozen journalists and industry insiders. Video, Sievert told the crowd, was already responsible for more than half of the data consumption on T-Mobile's network, and 80% of the video viewed by its customers was short-form content from services like YouTube and TikTok.

Quibi critics have long argued that this was essentially an argument against the service: Consumers were already busy watching clips for free, and there was little reason for them to pay for a premium version, walled off from the social networks that have become a daily habit for Quibi's target audience.

Quibi's execs on the other hand contended that the typical YouTube and TikTok fare wasn't good enough, and that a combination of recognized talent and big budgets would be able to win over millions of viewers. Millions that Sievers promised to deliver through a bundled partnership, complete with in-store promotions. "We're gonna go big," he said. "We're gonna bring it to our 68 million customers."

Financial details of the partnership were never disclosed. However, it's safe to say that T-Mobile did not deliver 68 million customers to Quibi. That's in part because the promotion, which promised T-Mobile customers free access to Qubi's $4.99 subscription tier, was only available to a subset of consumers who had two or more lines with the carrier. Consumers also had to seek out the deal and activate it through T-Mobile's app, adding further friction.

The telco's Quibi partnership was modeled after its promotional deal with Netflix, which first launched in 2017. Back then, the team-up was widely seen as disruptive, as it promised eligible T-Mobile customers free access to Netflix's HD plan, priced $10 per month at the time.

Things got a little more complicated when Netflix decided to raise its prices in 2019, and T-Mobile wasn't willing to cough up the difference. Since then, the carrier's "Netflix on Us" promotion features a hodge-podge of different plans and options, including a free standard-definition tier, and an option to pay $2 out of pocket to stream in HD.

T-Mobile's most puzzling foray into media to date has been its late 2017 acquisition of Layer 3, a small pay TV service that set out to reinvent the cable experience without changing the industry's core business model. T-Mobile shelled out $325 million for Layer 3, which at the time had just 5,000 paying customers.

The company has since rebranded Layer 3's service as TVision, a TV service that delivers a cable-like bundle starting at $100 a month plus taxes. In many ways, it's a very Quibi-like product-market-fit: Consumers have been ditching pay TV by the millions, and replaced expensive bundles with much more affordable combinations of Netflix, Hulu and Amazon Prime. But T-Mobile chose to ignore those signs, and instead simply built a slightly-better-looking interface for its still very expensive service.

"TVision is #Undisruptive," noted Lightshed Partners analyst Walter Piecyk at the time. "Who would buy this?"

Now, T-Mobile is looking to take the next step on its journey to become a media company. On Thursday, the company teased an upcoming TV-themed Uncarrier announcement for next week, complete with a video of a customer, played by Rashida Jones, calling up her cable company to complain about fees, and Sievert quipping: "You know what? It's time."

T-Mobile's next iteration of its TV service is likely going to be based on an Android TV dongle that has surfaced in regulatory filings in recent weeks. There's been no word yet on the pricing of the new service, or the kind of programming it will offer — but if T-Mobile's big bet on Quibi is any indication, the company will have its work cut out to find a proper market fit.

Entertainment

Peloton’s terrible, horrible, no good, very bad year

2022 just started, and Peloton has already halted bike production and is talking about mass layoffs. How did the pandemic darling get here?

How did Peloton go from pandemic star to sinking ship? One answer is the classic problem of supply and demand.

Image: Peleton; Protocol

It’s been a hell of a ride for Peloton. The headlines have been practically nonstop, from 2019’s cringey wife ad to 2021’s series of unfortunate “Sex and The City” events. But in 2020, Peloton could do no wrong. The at-home fitness company saw a 172% spike in sales over the course of that year, buoyed by the pandemic forcing wealthy gym-goers to stay home.

But nothing is ever easy or certain when it comes to Peloton. In the past week, Business Insider reported that Peloton is considering laying off 41% of its sales and marketing staff and closing down stores. CNBC learned that the company has hired McKinsey & Co. to help cut costs. And yesterday, CNBC reported that Peloton is temporarily halting production of its bikes. Peloton shares promptly plunged 24%.

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Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

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As Honeywell’s global chief commercial officer, I am privileged to have the vantage point of seeing the demands, challenges and dynamics that customers across the many sectors we cater to are experiencing and sharing.

This past year has brought upon all businesses and enterprises an unparalleled change and challenge. This was the case at Honeywell, for example, a company with a legacy in innovation and technology for over a century. When I joined the company just months before the pandemic hit we were already in the midst of an intense transformation under the leadership of CEO Darius Adamczyk. This transformation spanned our portfolio and business units. We were already actively working on products and solutions in advanced phases of rollouts that the world has shown a need and demand for pre-pandemic. Those included solutions in edge intelligence, remote operations, quantum computing, warehouse automation, building technologies, safety and health monitoring and of course ESG and climate tech which was based on our exceptional success over the previous decade.

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Jeff Kimbell
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Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs WordPress.com, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool Parse.ly and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

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David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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Two months after launching mobile games to all of its members, Netflix is looking to double down on gaming: The company told investors Thursday that it wants to expand its portfolio of games “across both casual and core gaming genres.” Recent job offers suggest that this could include both live services games as well as an expansion to PC and console gaming, and the company's COO hinted at major licensing deals ahead.

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Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Policy

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Photo: PartTime Portraits/Unsplash

Strange alliances formed ahead of Thursday's vote to advance a key antitrust bill to the Senate floor, with frequent foes like Sens. Amy Klobuchar and Ted Cruz supporting the measure, and prominent Democrats including California Sen. Dianne Feinstein pushing back against it.

Ultimately the bill moved out of the Senate Judiciary Committee by a vote of 16-6 after a surprisingly speedy debate (at least, speedy for the Senate). Even some of the lawmakers who called for further changes agreed to move the bill forward — a sign that the itch to finally regulate Big Tech after years of congressional inaction is intensifying, even as the issue scrambles traditional party politics in a way that could threaten its final passage.

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Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

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