Pistons challenge fans to virtual game USA Swimming appeals to listmakers People: Executive transactions From the Field of Management Earnhardt open to career in broadcasting Yormark, Cooper form naming-rights venture Faces and Places Cartoon: The real winner The Sit-Down: Felix Palau, Tecate Skipper: There’s no liberal bias at ESPN
SBJ/July 31 - August 6, 2006/This Weeks News
Analysts put Mobile ESPN on the defensive
Published July 31, 2006
Mobile ESPN general manager Manish Jha took aim last week at investment analysts who have attacked the validity of the network’s much-debated wireless phone venture, saying he believes the full value of the service has yet to be realized.
“The economics of this business, the way you operate a business like that, the way you sell it at retail, is all new,” Jha said. “For analysts who are looking at it from a distance, they don’t have as much visibility into the various aspects of the business.”
Jha declined to discuss any specific analyst and chose his words carefully given that corporate parent Walt Disney Co. is in a quiet period preceding the forthcoming release of quarterly earnings. But the latest and perhaps most damaging blow in an already rocky start to Mobile ESPN arrived recently from Merrill Lynch.
Jessica Reif Cohen, the firm’s lead media analyst, wrote to clients that “we believe it is time for Disney to pull the plug on Mobile ESPN. … we are hard pressed to understand who the core customer is for a premium-priced ESPN phone product.”
|One analyst wrote to clients that “we believe it is
time for Disney to pull the plug on Mobile ESPN.”
Fiscal losses this year for Mobile ESPN, originally pegged by Cohen at $120 million, now are projected at less than $80 million, with the reduction due to the smaller base of subscribers bringing smaller subscription acquisition costs. Both Mobile ESPN and a similar Disney-branded product are viewed as long-term investments by the Walt Disney Co., though.
“We are, at least within the mobile organization, feeling very, very good about what we’ve created and continue to focus on how we make it even better as time goes on,” Jha said.
Launched on the heels of Super Bowl XL in February, Mobile ESPN has been in a near-constant state of change. Pricing plans have been altered twice after initial complaints of relatively high prices. Mobile ESPN now offers a $39.99 a month voice plan for 400 minutes, a better value than the previous low-end offering of $34.99 a month for 100 minutes. But several of the higher-end features on the phone, such as video and audio clips from ESPN programming, incur additional fees.
A new $99 Samsung slim phone also recently hit the market to replace a chunkier, less popular Sanyo model.
Mobile ESPN recently hired former DirecTV executive Chris Brush as its vice president of marketing, and a new round of TV ads will hit soon, replacing the most-recent “Matty B” spots that showed an obsessive ESPN fan stalking the parking lot of the network’s Bristol, Conn., headquarters. The ads heightened an existing ad focus that marketed the phone to fans who consume sports at the exclusion of nearly all else.
“It was a bad launch with some very confused advertising. They positioned this as a network for losers,” said Seamus McAteer, senior analyst for M:Metrics, which measures mobile consumption trends. “All is not lost, I believe, but they need to retrench and relaunch. They seem to be learning and responding, but more needs to be done.”
Responded Jha, “We’ve already evolved beyond [the “Matty B” spots]. Since then, we’ve focused on fantasy football-related stuff and we’ve had GameCast related marketing. We’re continuing to talk more about what Mobile ESPN is and why you need it.”
Some analysts recently suggested Mobile ESPN should more prominently tout its relationship with Sprint, from whom ESPN leases wireless network capacity for the effort. Mobile ESPN is sold in Sprint stores, along with at Best Buy and online, and the Sprint connection is disclosed to potential and actual purchasers. But the link is not a focal point of the marketing.
Jha, however, said he is “comfortable” with the current exposure given to the Sprint brand.