ESPN ends Mobile ESPN MVNO; turns to licensing model to reach more sports fans

By Ken Kerschbaumer

Maybe content isn’t king after all. ESPN has ended its Mobile ESPN MVNO efforts after finding that consumers make cellular phone purchasing decisions based on price and form factor and not what content the phone will allow them to receive.

ESPN, however, remains committed to growing its presence in the wireless industry through licensing its critically acclaimed Mobile ESPN application to existing service providers.

Mobile ESPN, which launched to great fanfare in February, was lauded for its ability to keep sports fans up to date on the latest action but also exposed ESPN to the difficulties of the consumer mobile market: namely complaints over pricing and the complex intricacies of mobile phone contracts. During its seven months of being available as a product the company managed to land only 30,000 subscribers, a fraction of the 240,000 ESPN was hoping to snag.

“During the past few months, and especially over the past several weeks, we’ve been thinking a lot about our mission,” says Manish Jha, Mobile ESPN SVP and GM. “And it’s basically to serve fans and have the right risk/reward for Mobile ESPN. And in order to serve fans we clearly need to make our content available more broadly. So by working through multiple carriers, and not asking fans to switch cellular phone providers, we can serve more fans.”

In fact, Salil Mehta, ESPN Enterprises EVP, says ESPN is making the move in response to being approached by carriers other than Sprint (its current partner) about licensing models. “We’ve decided to pursue [licensing],” says Mehta. “ESPN is now able to take advantage of market opportunities that simply did not exist with our content before we built the MVNO. We remain committed to serving fans in the wireless arena.”

While ESPN MVNO (Mobile Virtual Network Operations) will end later this year ESPN says Mobile ESPN’s wireless voice and data services, including the Mobile ESPN sports content, will remain active for current customers until at least December 31, 2006. Current customers will continue to receive complete billing and customer care support during the transition.

“Customers who purchased Mobile ESPN phones will receive a full refund of their purchase price upon settlement of their final Mobile ESPN bill,” says Mehta. Before the end of the year, Mobile ESPN will contact all customers with details about future service options to assist in the transition to the new home of Mobile ESPN. Customers electing to discontinue Mobile ESPN service will be released from current contract obligations without early termination penalty.

Marina Amoros, Yankee Group senior analyst, Wireless/Mobile U.S., believes the move has little to do with subscriber growth or a lousy service and more to do with a shift in corporate strategy from on high.

“The service was launched in February so it was only in the marketplace for seven months,” she says. “And this decision probably happened a couple of months ago so I don’t think you can put this on subscriber numbers because no one would give a service like this only three months to prove itself.”

If anything the move may be an indictment of the current mobile business and the complexity of consumer contracts. Consumers are increasingly asked to sign multi-year deals to get phones with more advanced features like Internet access and video or audio streaming and downloads. As a result, even if a sports fan was interested in the advanced capabilities of the Mobile ESPN phone they had to either wait until their current contract expired or pay a heavy premium to cancel their current contract. For Mobile ESPN those difficulties slowed down any potential rush to the service.

“Content is just not a driver of the wireless service purchase for a significant portion of the population: it’s in the single digits,” says Jha. “So we looked at the investment levels, the competitive landscape, some of the challenges, and the upside opportunities and came to the conclusion to make our content available much more broadly.”