ESPN Mobile Strikes Out

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After eight months that saw rumors of sluggish subscriber numbers and questions about the business’s viability, the Mobile ESPN cellphone service has been benched by its corporate parent — a rare launch misfire for The Walt Disney Co.’s worldwide leader in sports.

The sports-oriented cellular service, which debuted with a big promotional splash on Super Bowl Sunday (Feb. 5), discontinued new sales last week and will shut down entirely after Dec. 31.

After that, Mobile ESPN will shift to a licensing model, offering its core content-presentation applications to the major cellular providers.

In the coming months, ESPN will provide customers with options for transferring to other cellular-phone services that provide Mobile ESPN content, and will provide a full refund for their ESPN-branded phones. If they cancel immediately, they won’t face the $150 early-termination fee their contracts required.

Mobile ESPN operated as a mobile virtual-network operator (MVNO), offering its own plan and phones but piggybacking Sprint Nextel Corp.’s cellular network.

ESPN has never disclosed how many customers bought the service, but industry estimates put the number as low as 10,000 subscribers.

Merrill Lynch analyst Jessica Reif Cohen estimated the service would attract only 30,000 subscribers by its February 2007 anniversary — far fewer than the 240,000 it had targeted.

Mobile ESPN senior vice president and general manager Manish Jha said ESPN determined “if we are able to make available the Mobile ESPN experience in a licensing model through one or more national carriers, then we are going to reach a heck of a lot more fans and serve a heck of a lot more fans than what is realistically doable through the MVNO model.”

ESPN Mobile required prospective new customers to switch from an existing cellphone service. Mobile carriers typically charge a $150 to $175 early cancellation fee to switch mid-contract, and that proved a strong disincentive.

Jha said only about one-third of the unit’s 100 employees will be needed to support the new licensing business.

As for the overall $150 million Walt Disney corporate has funneled into Mobile ESPN and its sibling family-oriented MVNO, Disney Mobile, that launched in June, the official Disney line is that Mobile ESPN’s service shutdown won’t affect Disney Mobile.

But there are signs of trouble there as well. In August, Disney Mobile shelved plans to enter the United Kingdom.

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