MOUSETRAPPED: Disney shuts down MVNO

The Walt Disney Co. is shutting down its remaining mobile virtual network operator, Disney Mobile, as of Dec. 31.
The company announced this morning that it would dismantle Disney Mobile and would explore “a new business model for its content and services that might include offering its popular Family Center product through a partnership with a major U.S. carrier.”
Disney’s former Mobile ESPN MVNO now exists as an application available through Verizon Wireless. The company pulled the plug on Mobile ESPN after less than a year of operations; Disney Mobile launched in June 2006, and runs its service over Sprint Nextel Corp.’s network.
“It’s been clear since we launched the MVNO that we were offering something both unique and useful for families that wanted to provide their kids with a mobile phone with suitable content and features while retaining a measure of control on how and when it would be used,” said Steve Wadsworth, president of the Walt Disney Internet Group. “Our feedback from customers and critics from the beginning has been that we exceeded the mark in that respect. However, the MVNO model has proven, as we’ve seen with other companies this past year, to be a difficult proposition in the hyper-competitive U.S. mobile phone market. In assessing our business model, we decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area.”
The move is not a total surprise; Tom Staggs, senior executive VP and CFO of Walt Disney Co., indicated at a recent investor conference that the company was re-evaluating its MVNO business due to concerns about distribution and scale. Disney Mobile has not disclosed the size of its customer base.
According to Disney, current Disney Mobile customers will receive service and support until Dec. 31, 2007. The company said it will offer a reimbursement program for eligible customers. Details of the reimbursement program were not immediately available, but the company said they would be posted on the Disney Mobile Web site no later than Oct. 8.