ESPN Mobile Failure: Bad News for Mobile Media in U.S.
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Written By Kate Zimmermann | September 28, 2006 | Share This
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Today Disney pulled the plug on Mobile ESPN, announcing that the service would be phased out by Dec. 31, 2006. Mobile ESPN is one half of Disney’s $150 million MVNO project, launched in February on the Sprint Nextel wireless network. Despite ESPN’s brand recognition and reputation among sports fans, the Mobile ESPN service attracted less than 1/4th of the expected user base. An official letter of apology was posted on the Mobile ESPN website this morning.
Analysts point to poor marketing and distribution as the primary cause of failure. Says Peter Gorham, quoted by Red Herring, “it was tough to tell where you could get their phones.” The expensive ad campaigns run on ESPN.com, TV networks and radio couldn’t outweigh ESPN Mobile’s poor ratings by industry analysts. With 175 other MVNO brands in the United States, many of which offered lower prices and prepaid services, it was difficult for ESPN to compete.
The problem runs deeper than marketing. As an MVNO, ESPN Mobile pays high fees to Sprint in order to lease their network infrastructure. That leasing cost is passed onto the customers as monthly premiums that are about $20 higher than the average mobile plan. Furthermore, ESPN’s phones launched at about the same time that mobile technology in the United States was transitioning from 2nd Generation to 3rd Generation. As a first-mover in the industry, ESPN had high overhead costs that lagging subscriptions didn’t manage to recover.
The failure of ESPN Mobile brings up new hesitations for other companies developing mobile media products. As the Washington Post reports, “Many analysts are skeptical whether it’s a business model that can succeed…given the marketing muscle of the national players. That a brand as popular and well-funded as ESPN couldn’t make it work adds to that doubt, particularly since Mobile ESPN developed a uniquely sophisticated mobile service compared with the content offered on regular cell phones.” It might simply be too early to introduce sophisticated 3G services to the U.S. market. I place a large part of the blame on the carriers themselves, who cause lagging market adoption of 3G tech by tying customers into extended 2 – 3 year contracts. Most Americans, me included, are unwilling to pay the full $300+ for a phone that is marked down nearly 80% for newly-signed contract customers, in ADDITION to the extra $40/month for service fees. The other issue hindering 3G adoption (as suggested by our resident mobile expert, Andy Yang) is the limited range of U.S. phones. Says Andy, “The CMDA network employed by Verizon and Sprint doesn’t work anywhere else [but the United States]. While we do have GSM carriers, the lack of competition within the US Market keeps network carriers from being as innovative as they should be.” He noted, however, that our restricted mobile standards have protected us from spam and cold calling on the cell phone network.
In their letter to the public, ESPN claims that they’re planning to distribute to the established audiences of other wireless carriers. We’ll see how the service performs once reintroduced (if reintroduced), and in the meantime, we will certainly have a close eye on ESPN’s MVNO sister project, Mobile Disney.
Topics: Media Convergence, Technology, Wireless & Mobile |
We have an espn phone. Who is the new carrier as on 12/31/06?
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