Reviving Quibi's Content: Roku Is Reportedly in Talks to Buy Streamer's Library

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Courtesy Quibi

Roku is in "advanced talks" to acquire Quibi's orphaned content library, according to a Wall Street Journal report citing unnamed sources close to the deal.

Neither Roku nor Quibi would comment, but if a deal is struck, it could provide the San Francisco-based Roku more ammunition in the streaming wars, give Quibi content a new home and pay out burned investors.

Terms of the potential agreement have not been publicized, and the negotiation could fall through. Shares of Roku closed down more than 4% on the news.

Until now, Roku's primary function has been as a hardware provider for streaming apps like Netflix. It is the most popular streaming-media player in the U.S. by hours streamed, ahead of competitors such as Apple TV and Amazon Fire TV. The platform reaches homes with over 120 million people, according to Roku spokesperson Dallas Lawrence. In November, the company reported 46 million active users and gross profit of $215 million, up 81% year over year.

With Quibi's library, Roku would no longer be solely reliant on external producers like Hollywood studios and major networks for content. The platform already has a natural home for Quibi's content with its free app called the Roku Channel, where it hosts shows and movies that until now have primarily been licensed from third parties, occasionally in exchange for including those parties' streaming apps, like Peacock and CBS All Access, on its popular platform.

Roku's reach during the pandemic has helped catapult its stock. Shares have risen over 225% since March 18, as more viewers are stuck at home, sending the company's market cap north of $40 billion.

As for Quibi, which flamed out spectacularly in 2020 after raising $1.75 billion, the content sell-off would be one of its final acts before its dissolution is complete. The company has about $350 million remaining from its fundraising.

Its investors – which include several preeminent Hollywood studios, along with JP Morgan, Goldman Sachs, Google and Alibaba – will receive a portion of that $350 million, plus some of the proceeds from a sale of its remaining assets, including its content library.

The question for investors is how drastic of a haircut they will end up with. That depends on the terms they hammered out with Quibi, which are not public.

Normally, returns from such a dissolution are distributed hierarchically, with priority dependent upon the individual deals, said Aaron Swerdlow, an entertainment lawyer at Westwood-based law firm Weinberg Gonser LLP. Investors may receive payout preference based on how early they invested and the size of their investments, he said.

Anis Uzzaman, whose Pegasus Tech Ventures invested $35 million in Quibi's second fundraise of $750 million, said the Class C shares he and other investors in the round received likely won't entitle him to any reimbursement at all.

Uzzaman previously told dot.LA he was hoping to get back as much as 40% of his investment.

"Class A (and B) are the ones who will get back partial, if not full return of their investment but for Class C, it will most probably be a stretch for us to get back anything at this point," he said, adding that a closer look at the terms of his firm's deal with Quibi showed that Pegasus would only recoup if Quibi retained over $1 billion of capital. The content sale, Uzzaman added, is unlikely to fetch enough to surpass that threshold.

Given Jeffrey Katzenberg's past failures at selling off Quibi's content library, Swerdlow is inclined to agree. Roku, he said, would "probably (be) getting Quibi content on the cheap" – which, in turn, would limit the amount of money that gets returned to investors.

So, too, could the terms by which Quibi acquired its content in the first place. To lure creators to its platform, Quibi offered seven-year deals, with producers retaining the right to distribute their shows elsewhere after two years.

On the other hand, Swerdlow also said now is "a good time to sell content" as streamers continue jockeying for position and the coronavirus has slowed production.

Meanwhile Quibi remains the target of a lawsuit from Eko, a tech firm that claims the L.A.-based startup failure stole the technology underpinning its "Turnstyle" feature, which allowed users to watch shows on their mobile phones in either portrait or landscape mode. Eko's suit is funded by renowned hedge fund Elliott Management Corp. Quibi has called the claims "baseless." The extent to which the lawsuit affects a potential acquisition of Quibi's content is unclear.

Should the deal go through, Roku will have power to push viewers toward its new content, Swerdlow said. They could do so, for example, by defaulting users to the Roku Channel and adding friction should they wish to watch other streaming platforms. Roku could also further prioritize advertising its own channel.

How much Roku leverages such power rests on the question of whether they are willing to spend the money to develop content, Swerdlow said.

A purchase of Quibi's library — some of which was created by big names such as Steven Spielberg, Sam Raimi and Chrissy Teigen — could tilt the streaming scales toward Roku.

And although it won't net Uzzaman any return, he views a purchase of Quibi's content as a "validation of our there's at least some satisfaction as an investor."


Sam Blake primarily covers media and entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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Inflation Reduction Act Officially Passes the Senate, Revamping Electric Vehicle Pricing

David Shultz

David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.

The Capitol at Sunset
Courtesy of Mike Stoll via Unsplash

Over the weekend Senate Democrats officially passed the Inflation Reduction Act in what amounts to President Biden’s biggest legislative win so far. The bill includes a host of broad-spectrum economic policy changes and completely reworks the subsidies for electric vehicle purchases. The law still has to get through the House, but this should be a much smaller hurdle.

dot.LA covered the bill in depth as it neared the goal line at the end of July, and the final iteration doesn’t change much. To recap:

1. The rebate total stays $7,500 but is broken into two $3,750 chunks tied to how much of the car and its battery are made in the US.

2. The manufacturer caps are eliminated, meaning even EV companies that have sold more than 20,000 vehicles are once again eligible.

3. Rebates will now only apply to cars priced below $55,000 and trucks/SUVs below $80,000

With the new system placing a renewed emphasis on American manufacturing and assembly, the calculus of which vehicles cost how much is still being worked out. The most comprehensive (but unofficial!) list I’ve seen has come from Reddit user u/Mad691.

In addition to the EV rebate program, the bill also includes a number of economic incentives aimed at curbing emissions and accelerating the country’s transition to electric vehicles.

There’s $20 billion earmarked for the construction of new clean vehicle manufacturing facilities and $3 billion will go help electrify the USPS delivery fleet. Another $3 billion will go to electrifying the nation’s ports. Then there’s $1 billion for zero-emission trucks and buses.

Now that the bill is about to be codified into law, VC investment in the sector might heat up in response to the new money flowing in.

“I do anticipate more climate funds standing up to invest in EV infrastructure,” says Taj Ahmad Eldridge, a partner at Include Ventures and the director at CREST an ARES Foundation initiative with JFF/WRI that aims to provide training for people in the new green economy. “However, we do see funds being a little more thoughtful on diligence and taking their time to fund the right investment.”

The sentiment seems to be shared across Southern California. ChargeNet CEO and Co-Founder Tosh Dutt says the Inflation Reduction Act “super charges” the company’s effort to build infrastructure across the country.

“This investment accelerates the transition to renewable energy and gives companies like ChargeNet Stations the confidence to expand more rapidly, especially in underserved communities,” says Dutt.

For Rivian, the bill’s passage has left would-be customers in a sort of limbo. Because many of their models will exceed the $80,000 cap for trucks and SUVs after options, customers who’ve preordered are scrambling to sign buyers’ agreements to take advantage of the current EV rebate scheme which doesn’t include price caps. As I noted in the previous article, if you buy an EV before the bill is signed, you’re eligible for the current rebate system even if the vehicle isn’t delivered until 2023. Any existing contracts under the current system will remain valid.

With the legislation seemingly on the fast track to become law, it’s unclear whether or not Rivian will expedite the purchasing process to allow customers to sign the buyers’ agreement before the new rebate program becomes the law of the land. Tick tock!