Disney Dumps MVNO

 

Disney dumps MVNO

Within an hour yesterday of hearing that Walt Disney Co. had shuttered its Disney Mobile MVNO, my email in-basket suddenly filled with notes from a handful of existing MVNOs asking me to speak with them. Their mission was clear: they want to distance themselves from Disney Mobile and all the other high-profile MVNOs that have failed over the past year by telling me why their business will succeed. It's tough to be an MVNO when all your peers are closing their doors.

Disney Mobile's closing comes as little surprise. For those of us following this segment over the past few years, we've watched the MVNO business model rise and fall. The MVNO strategy, once touted as the next great growth opportunity in the wireless industry, is now disdained after high-profile failures of initiatives such as Mobile ESPN and Amp'd Mobile.

To be fair, I know that companies like Walt Disney Co. didn't enter the MVNO business on a whim. They took their time and studied the market before making the leap. I visited the Disney Mobile team at their offices in Los Angeles two years ago and I remember talking to George Grobar, who was heading up the Disney Mobile effort. He clearly understood the complexity of the wireless market and he realized that the company would be competing for subscribers that may already have family plan contracts with existing operators. Nevertheless, he thought they could lure those subscribers away with innovative content and special services such as the family finder LBS application.

But two years ago everyone was bullish on the MVNO model. Analyst reports (even the most cautious ones) were predicting that the U.S. market would support dozens of MVNOs. Obviously many well-respected companies got caught up in the hype.

I empathize with the remaining MVNOs but I'm still very cynical about this business model. I think the U.S. mobile market is highly penetrated and traditional operators are not going to forego certain niche markets to MVNOs. We've already seen all the Tier 1 operators aggressively target the Hispanic market with their services. And just recently Verizon Wireless launched a handset called the Coupe [1] and two rate plans specifically targeted at the senior market. I suspect we'll see more of these carrier-driven initiatives directed toward specific markets in the year ahead. -Sue [2]