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Mobile ESPNs Closure: Time-Out for MVNOs to Check Their Playbook

Product Type: Market Research Report
Published by: Yankee Group
Published: November 2006
Product Code: R388-2304
Description
Strategy Not Subscribers Spur Decision to Close Shop
On September 28, 2006, Mobile ESPN announced that after only 7 months in service it will shut down its MVNO operations effective as of the end of the year. Because it happened so quickly after launch and before Mobile ESPN had the opportunity to capitalize on the crest of 4Q wireless sales, this closure is not due to disappointing subscriber numbers but rather a shift in Disney Corp.’s strategy that came with the new leadership of Bob Iger and Steve Jobs.

When Mobile ESPN was initially conceived in 2004, the concept was to provide a soft ROI for ESPN by targeting the existing customer base of ESPN content consumers. Unlike other MVNOs (namely Helio and Amp’d), Mobile ESPN’s established brand dictated predetermined quality of service and customer satisfaction requirements. When Mobile ESPN launched in early 2006, the defined strategy and goal was to leverage the mobile environment to extend the ESPN brand and content to the wireless platform without diluting its content ownership, revenue streams or customer sports experiences.

Current MVNOs worried about the impact this will have in the market need only be concerned if their own investors are similarly about to get cold feet. Today’s MVNOs must ensure that their investors and partners understand that the MVNO venture is a 2- to 3-year commitment before any profit is realized, and that 6 months is far too short a time-span to measure the relative success or failure of a venture. Of the prominent MVNOs that launched in early 2006, namely Amp’d, Helio and Disney Mobile, their judgment day should come no sooner than March 2007. They all require at least 9 to 12 months, and especially the fourth-quarter holiday shopping period, to educate customers and build a respectable subscriber base.
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