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NEW YORK—After a mere eight months on the market, Mobile ESPN has decided to get out of the mobile virtual network operator business.
The brand’s entrance into the wireless space was eagerly anticipated, scrutinized and praised for its innovative user interface, but handset problems and a lack of consumer interest drew clouds over the business. Indeed, Merrill Lynch analyst Jessica Reif Cohen earlier this year called for the Walt Disney Co. to “pull the plug” on the service—and it seems Disney has now heeded her advice.
“Our MVNO effort created a tremendous wireless asset widely recognized for quality and innovation, and as a result we have been approached by well-entrenched carriers about a licensing model. We have decided to pursue it,” said Salil Mehta, executive vice president of ESPN Enterprises. “ESPN is now able to take advantage of market opportunities that simply did not exist with our content before we built the MVNO.”
The company said that it “remains committed to growing its presence in the wireless industry through licensing.”
Mobile ESPN launched nationally in February during the Super Bowl with service on Sprint Nextel Corp.’s CDMA EV-DO network. The service launched with one handset and a limited selection of pricing plans, but over the months, the MVNO expanded both its handset lineup and pricing plans.
Mobile ESPN said its subscribers will continue to receive bills, customer care and service until at least Dec. 31. Sales of new Mobile ESPN handsets and service plans are being frozen immediately.
At the Informa MVNO Sustainable Business Models conference, the news was received with a mixture of shock and resignation. Conference participants opined that the company suffered from a lack of patience on the part of its parent company and a less-than-optimal distribution strategy; one audience member said he had walked into an ESPN store in Manhattan recently and asked about the service only to be told that the service wasn’t sold in the store and that the employee was unsure if the product was available in New York.
Despite the flameout of Mobile ESPN, some offered an optimistic outlook on the MVNO market in general.
“I wouldn’t even begin to think about throwing out the baby with the bath water,” said Alex Paskoff, senior vice president of marketing and business development for Brightpoint, which provides distribution and logistics services for carriers and MVNOs. “This is one MVNO out of many.”
He said that—based on comparisons to similar efforts in other industries—up to 70 percent of MVNOs could be expected to fail.
“I wouldn’t get too worked up about any extreme success or extreme failure,” Paskoff said. “I think the reality is, it’s going to fall somewhere in the middle.”
