Thoughts @

mvno a no go?

mobile espn launch 2006

This has been the year of the MVNO (Multiple Virtual Network Operator) and for the US to show their plucky chops and perhaps shine in the mobile space at last. The promise of applying brand focus to a carefully targeted audience in the form of an MVNO has been tried and true in other countries – why not the US? Well – a few days ago it was announced (officially) that Mobile ESPN is closing.

An excerpt from the site: “We have decided to change the direction of Mobile ESPN. As of December 31, 2006, Mobile ESPN will cease its wireless service provider operations and work to deliver our content experience through another nationwide carrier.

In the last year, ESPN Mobile signed up some 30,000 individuals willing to pay a premuim to brand themselves as sports fanatics. This number, although impressive falls far short of the projected 300,000 for this year. So this signals a change in strategy and approach for the MVNO-focus in the US market. And perhaps an omen for the end? What does the future fare for MySpace-equipped HELIO and the overly hyped AMP’d and what are the measurement of success?

The issue seems to lie in two areas. 1) Americans are cheap. and 2) Americans don’t like change. With HELIO and AMP’d – there is an additional factor to consider – that the youth market being marketed to is still (largely) under the control of their parents purse strings – and the fact that they can create an even more fluid access to something they consider to be addictive (MySpace) is not the best motivation to shell out an additional $100/month plus the cost of a new device. The concept of buying a device separately from the calling plan is a foreign concept (literally), and is not a part of the American mobile vocabulary since handsets have been subsidized and rolled into two year commitments since the start calling plans here in the US.

We will continue to wait and watch. And hope. We want mobile content and services, not to mention 3G to flourish – however the question really is – will American’s pay the price? HELIO is a usable and very slick BMW M-series service. But if Americans are only able to pay Hundai prices and cannot see the difference, even the most sophisticated service paired with an elegant device will not survive.

Posted on September 30th, 2006 in Thoughts
Tagged as , , ,
Written by Kelly Goto

5 Responses to “mvno a no go?”

Comments

  1. Greg Fields says:
    September 30th, 2006

    There is an exception that proves this rule - Virgin Mobile. What they do differently than ESPN, Disney, Amped and even Cricket, is that Virgin Mobile US/Canada/Australia/UK (a) leverage the opportunity to be different than the competitors, (b) they integrate that difference into their brand promise, (c) they project + protect + portray their brand first and foremost and (d) they leverage their buying power to purchase low-end wireless terminals from ODMs and Tier 1 OEMS.

    With this formula, Virgin Mobile is able to sell low-end handhelds to the 18-34 years old marketplace under a fast moving consumer goods (FMCG) model and maximizes their slim profit margins.

    If there were a lesson to be learned here, it would be to (1) focus on the niche opportunity and not the Total Addressable Market, (2) create/protect a lifestyle brand that celebrates the niche, and (3) apply a business model already tested in the target company of operation.

    I guess it doesn’t hurt to have some magic Branson pixie dust spread over your strategic plans every so often to help secure sucess.

  2. Josh Williams says:
    September 30th, 2006

    Mobile ESPN was doomed from the get go for a handful of reasons, which can be summed up with explanation 1 above, “Americans are cheap.” However, ESPN / Disney should have seen this coming.

    Their target market was predominately male, I’m loosely guessing between the ages of 20-50. On the younger side of that spectrum (i.e., college age and shortly thereafter) you simply don’t have the disposable income to pay for a luxury phone service.

    On the older end of the spectrum you end up with men who are perhaps married, have families, and are likely to want a family plan for their mobile coverage (again, because its cheaper).

    If I could add some sort of ESPN-esque smart-client to my existing Cingular plan, I’d probably be willing to pay $10 a month for it, and my wife and I can still share Cingular minutes, stay on the same network, blah blah blah.

    But there’s no way I’m paying a premium so I can sit on one network while I’m paying a separate bill for the rest of my family on another network. Again, ESPN should have seen this coming.

    Solution: Let the MVNOs share plans with their parent networks.

    Unfortunately that’s much easier said than done, and will likely never happen.

  3. Kelly Goto says:
    September 30th, 2006

    Josh, invaluable insight. I agree with the ‘Americans are cheap’ notion and that even for the most addictive behavior has a budget and ramifications - the least of which is to admit to the addiction and then add it to the family plan. The target audience might sneak in a hi-def TIVO or a new SLINGBOX but a monthly fee that is reviewed and budgeted for might be a hard stretch for this target audience.

  4. Joe Pemberton says:
    September 30th, 2006

    On the anniversary of Mobile ESPN’s closing, it’s sister MVNO Disney Mobile will also close. The outlook for MVNOs is not good.

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