The next MVNO has fallen. According to Reuters, "Walt Disney's ESPN cable sports channel said on Thursday it will shut down its Mobile ESPN wireless telephone business operations later this year and aims to license the brand to existing mobile providers." As many of you know, I wrote about the MVNO Death Spiral several months ago.
The sad part about this situation is that the company's future plans to license the brand to existing mobile providers is what it should have concentrated on to begin with. The wireless industry is extremely competitive. Being an MVNO was not a core competency that ESPN should have ever considered developing. The model is too far flung from their main business. They should have just sold ESPN information services to key players such as Sprint and Verizon and reaped the licensing benefits within. That would have allowed them to build and protect their brand without having to launch such a risky and expensive investment.
There are some immediate ramifications of this shut down. First, there are good people up in New York that will be looking for a job soon. I know a few of them, and it is a shame. Second, what signal does this send to the market about the Disney Mobile MVNO venture. If the ESPN brand can't muster enough customers to keep the lights on, can Disney? What about Disney Mobile's competition - Kajeet? They are soon to enter the market with no brand equity or awareness. Will they even get out of the gates?
Only time will tell. Unfortunately, I suspect I will be writing about another collapse fairly soon. My prediction? Between Amp'd, Kajeet, Disney and Helio - I foresee two of the four going belly up in the next 18 months.