Does AI have a Quibi problem?

And does Quibi's vindication make it worse?

Hollywood is in love with short digital video for the second time.

Recently, Paramount said they’ll be testing micro-dramas, the short serialized soap operas that have become so popular in China that some describe them as evidence of the nation’s soft power. In the back of the classroom, hiding under the chair, are the less prestigious serialized vertical videos that have found success, like Fruit Love Island, an AI-generated reality TV parody about a bunch of fruit looking for love.

I’m reminded of the drama around Quibi, the short-lived 2020 subscription streaming service that was supposed to bring short-form content to the masses. Founded by Hollywood legend Jeffrey Katzenberg (the K in “Dreamworks SKG”), it had a few obvious missteps (at least in retrospect). An emphasis on high Hollywood talent wasn’t really necessary. Some tech bells and whistles, like vertical and horizontal playability, were a waste of money. And the subscription fee itself created a paywall for a product that people didn’t know they wanted.

Yet the biggest bet — that people would be gobbling up dramatic short form content in every grocery line, at every stop light, and between all the other waking moments of their day — was miraculously right. Katzenberg was widely mocked as being the oracle that wasn’t, but now he just looks like he was early and poorly priced.

Of course, this is all a measure of what being “right” about a business really means, and how much you think timing has to be part of the equation. Though launching during a worldwide pandemic was actually fortuitous for reaching content-starved quarantined customers, Quibi was just too early on to be a hit. Too early for premium on phones, too early for premium short form, and perhaps too early for sub-premium attention spans. A right idea at the wrong time isn’t really a right idea.

So what’s the broader take on this for the business of tech? I wonder if the leading AI labs are producing a premium product that people will later get at a much reduced cost. Thus far, this newsletter must have seemed like a blessed respite from AI discourse, but I can’t help but think of the massive capital expenditures of OpenAI, which has sunk a lot of money into a partly proven business model. Established players like Google are doing the same, but it seems fair to say they’re lurking in the background and trying to make a profit.

That’s to say nothing of the open-weight models (AI you can download and run on your own) that are increasingly competitive with leading AI companies. They represent a potential disruption of AI in a highly uncertain marketplace, where we have yet to learn what customers really want, how much they’re willing to pay for it, and how much costs will balloon or deflate in the future.

In hindsight, Quibi was an incredible idea, but at the same time, it was right to mock it. It failed. Wondering if these labs are the next Quibi doesn’t express skepticism about AI, just about its most likely path toward profitability. Next time I read about a hundred billion AI budget, I’ll be wondering: is this the right bet? Or should I just wait for Fruit Love Island to come along?