First it killed Bambi's mother. And now it's decided to kill a fourteen-month-old wireless service.
Today, the Walt Disney Company said it will soon shut down Disney Mobile, the US-based wireless service it offers on bandwidth rented from Sprint Nextel. Unhappy with life as a mobile virtual network operator (MVNO), the company has already put the kibosh on sales of Disney Mobile, and those already using the service will get the boot on December 31.
Basically, the let's-rent-some-bandwidth model didn't pan out the way the company expected. "The MVNO model has proven, as we’ve seen with other companies this past year, to be a difficult proposition in the hyper-competitive US mobile phone market," said Steve Wadsworth, president of Disney's internet group. "In assessing our business model, we decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area."
What's the new strategy? The company still believes in Disney Mobile's Family Center suite - which lets parents keep close tabs on their kids - and it hopes to move the suite onto someone else's mobile service via a licensing deal.
According to a company spokesman, recent changes in the mobile market made licensing far more attractive than MVNO. With the major carriers signing exclusive deals with big-name retailers, he told us, it became more and more difficult for Disney to compete. Verizon, for instance, has teamed up with Circuit City.
"A lot changed while we were ramping up the service in terms of the distribution landscape. We came to the conclusions that given all the changes in the retail model of the major carriers, it didn't make sense for us to undergo the investment needed to overcome the obstacles that cropped up."
This is hardly new territory for Disney. In February last year, the company launched ESPN Mobile, an MVNO service that dovetailed with its popular cable TV sports network/hype machine. This rental network was shutdown after just 11 months, and Disney stomached $30m in losses. Today, the company offers ESPN Mobile applications over the Verizon Wireless network.
As it seeks a similar licensing deal for Family Center, Disney will throw some dough at current users and help them transition to other services. "We will be communicating directly with customers about reimbursement for their handsets and their accessories," the company told us. "We'll also assist them find a new service and port their content over - if they like."
What's the financial damage this time around? Disney won't say. But it's fiscal year ends over the weekend, and an earning statement is just around the corner. ®