Despite being a wireless phone service provider, Mobile ESPN struggled with communication.
The business never convinced the ESPN audience that the benefits of expanded sports content was worth paying extra for their cellphone service. As a result, ESPN said Thursday that it was shutting down its service in favor of providing content to other carriers. It’s an illustration of the difficulties that providers face in targeting too specific an audience and getting them to switch to a pricier service.
“It comes down to differentiating yourself and demonstrating what the value-added proposition is,” said William Power, an analyst at Robert W. Baird & Co. “It was never clear to us what the true value add was other than more direct access to ESPN and a few other bells and whistles. I don’t think that was enough to move existing customers to a new carrier.”
Mobile ESPN, owned by Walt Disney, was among a new crop of mobile virtual-network operators – companies that buy in bulk and resell network capacity from a wireless carrier – attempting to go after a niche market with a premium service and well-known brand. It was trying to emulate the success of Virgin Mobile, which made MVNOs hip with the youth market. But part of Virgin’s success is due to its prepaid business model, which allows customers to pay as they use more minutes and requires no commitment.
While Mobile ESPN had the recognizable brand, it lacked the cheap service. Its basic monthly phone plan, which requires a two-year commitment, consists of 400 minutes at $40 a month. Sprint Nextel, which Mobile ESPN used as its network backbone, offers a similarly priced plan that includes 450 minutes. Its main feature – premium sports content – could be added for an additional fee, further driving up the monthly rate.
In July, Mobile ESPN General Manager Manish Jha acknowledged difficulties in getting the message out on how its service differed from the nationwide carriers such as Sprint or Verizon Wireless. As a result, it disappointingly added only 50,000 customers since its hype-filled Super Bowl launch in February. Critics say that the rabid sports fan made up too narrow a customer base. Mobile ESPN said in a statement that it believes the licensing model represents a bigger opportunity.
Lessons To Be Learned
Mobile ESPN’s failure are indicative of the challenges that companies face when they have little experience in the wireless service business. “ESPN’s experience is confirmation that moving away from your core competency requires super diligence,” said Rich Nespola, chief executive of consulting firm Management Network Group Inc.
Disney Mobile, another Walt Disney wireless venture, could run into similar problems. The MVNO hopes its family-friendly brand will win over parents looking to get phones for themselves as well as for their children.
The service is priced similarly to Mobile ESPN, and it offers features such as the ability to limit the number of minutes for a phone or track a child down through their global positioning system-enabled phones. Still, similar to ESPN, Disney lacks experience in this hyper-competitive business, and may be focusing on too narrow an audience.
“Disney Mobile is way too nichey,” said Patrick Comack, an analyst for Zachary Investment Research. He expressed doubt over the business’s long-term viability.
Disney Mobile isn’t the only MVNO facing those risks. Helio, a joint venture between SK Telecom and EarthLink, has positioned itself as a high-end brand targeting both the youth and Korean-American market. Amp’d Mobile, meanwhile, is going after the trendy youth market with both a high-end plan and prepaid option.
While the youth market represents a larger opportunity, it remains to be seen how many people will switch contracts for a pricier service. That’s particularly the case if the larger carriers start offering comparable services. Mobile ESPN faced that problem since most carriers had access to some ESPN content.
“When the major carriers start doing deals with MySpace, Helio is dead,” Comack said, referring to Helio’s main selling point: its partnership with the popular social-networking site.
One successful MVNO model may be one that specifically targets ethnic groups by catering to their cultural and language needs. Several have sprung up, including Movida Communications, InPhonic’s Viva Libery, Dexa Wireless and IDT’s TuYo, all of which serve the Hispanic market with prepaid service.
“Some of the ethnically based MVNOs show some promise,” Power said. The nationwide carriers are too large to go after specific ethnic markets, leaving the door open to the MVNOs. Still, with so many different players popping up, there remains the risk of overcrowding.
The analyst doesn’t have any conflicts of interest to report.
For carriers such as Sprint or Cingular, the MVNO business is just a blip on their balance sheet. But it still represents an important revenue driver over the long run. Mobile ESPN’s stumble suggests the carriers will have to be more patient than previously thought.
Source- http://www.cellular-news.com
Posted by wirelessfed 
Wireless News 