Bear my hyperbole during this post, but that’s the treatment it needs: I think this is preposterous…even though ESPN’s mobile service MobileESPN has not done that well since it launched officially during Superbowl (and we’ve been the first to report and criticize it), to say that 6-8 months is enough to figure out whether it works it bordering on lunacy, and devoid of any sane business reasoning.
ML analysts Jessica Reif Cohen and Michael Kopelman wrote in a research note that “it is time for Disney to pull the plug on Mobile ESPN”….Merrill added that while Disney significantly reduced the cost of the handset in April, dropping the price of its Samsung model to $99 after the original Sanyo handset launched at $399, “the model does not appear to be a particularly attractive use of capital,” as the reseller business traditionally offers a low return on investment. (Incidentally, the bulkier Sanyo is now available free-of-charge after a $29 mail-in rebate.)
They estimate that MobileESPN will lure a mere 30,000 subscribers over the course of this financial year, well below their original estimate of 240,000. Along with the losses generated by a second Disney-branded phone service, ML expects that the Mouse will lose $135 million on its experiment in FY06.
There’s absolute merit to try and rework the model as ESPN has failed in first iteration…but to pull the plug this early…please. Go back to analyzing media companies…not MVNOs/operators.
For everything MobileESPN, read our dedicated company section.