Shutdown of Mobile ESPN service shakes nascent industry

The news is leading to new questions of the validity of business models driving many of mobile initiatives.
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Mobile TV, one of the most hyped wireless technology initiatives of the past year, suffered its first major American failure last week when ESPN decided to pull the plug on Mobile ESPN, its highly promoted wireless sports service.

Only a month ago, Mobile ESPN began to offer 25 college football games a month live to its users. Apparently, not enough sports fans were willing to pay at least $40 a month for the service. Though no official subscriber numbers were provided, news reports said Mobile ESPN had attracted only tens of thousands of customers since its launch in late 2005.

Getting consumers to abandon their current calling plans and switch to ESPN’s “proved to be harder than we assumed,” Salil Mehta, executive vice president for ESPN Enterprises, told “The New York Times.”

The ESPN all-sports network entered the mobile market as a mobile virtual network operator (MVNO). That means the service provider pays to use another company’s network to deliver its content to mobile subscribers. In ESPN’s case, the provider was Sprint Nextel.

In its announcement, ESPN said it would cease being an MVNO later this year and would license its Mobile ESPN application and content to existing mobile phone providers.

In fact, Mobile ESPN was available to millions — they just didn’t become subscribers. According to news reports, ESPN’s parent company, Walt Disney, had spent a combined $150 million in developing Mobile ESPN and Disney Mobile, another ambitious mobile service enterprise not affected by last week’s ESPN announcement.

As of last April, there were an estimated 175 MVNO brands either being launched or planned. Even before the failure of Mobile ESPN, there was wide skepticism among analysts about the chances of many of the start-ups.

The news of ESPN Mobile’s shutdown is already leading to new questioning of the validity of business models driving many of the mobile initiatives, and whether enough mobile phone users will ultimately choose to pay for premium TV and data services.

Mobile ESPN’s wireless voice and data services, including the Mobile ESPN sports content, will remain active for current customers until at least the end of the year. Current users will continue to receive customer support during the transition. Sales of Mobile ESPN handsets and service plans at Sprint and Best Buy stores were discontinued last week.