Disney exec worries over MVNO

Mobile virtual network operator Disney Mobile has been well-received by parents, but lacks scale and may see some changes to its business model, according to remarks by Walt Disney Co.’s senior executive VP and CFO Tom Stagg at a Merrill Lynch conference this week.
“We’ve continued to get really strong critical acclaim for the product, and really strong response from subscribers,” Stagg said. “Parents have really embraced the features of the phone.”
However, he went on to add that the MVNO “is a business where there are a number of elements where I think you need to have scale to be successful, distribution being one of them. I think that we’ve seen some challenges in distribution. We’re actually in the process of evaluating where we sit.”
He said that Disney continues to be excited about its MVNO product, but understands the challenges related to scale and distribution.
“To the extent that we think we’re on the right business path, we’ll go forward,” Staggs said. “To the extent that we think we need a change in the business model, we’ll make that change.”
Disney launched its MVNO, which targets families by offering parental controls and tracking features as well as family-friendly content, in June 2006. The company also backed an MVNO for its ESPN brand, but ultimately shuttered the operation after less than a year when its performance did not live up to expectations. Disney instead pursued a licensing model for Mobile ESPN, and the sports application at the heart of the service is now available to Verizon Wireless subscribers.