Repeat After Me…

If you read through all the comments, you're both right. That said, the original blog entry is a bit misleading. FJ is right: it wasn't a content play. And technically speaking, the deep integration and customization required to deliver real time call and data controls made Disney a good MVNO candidate. That said; from an economic perspective, we've all learned the hard way that MVNOs will have to go toe to toe with operators on the cost of acquiring subs. This mandates that any MVNO in the US will need at least $1bn to market and susbsidize enough subs to build up a substantial base and establish market share. Doing this as a tightly coupled JV with a host network on their existing devices, marketing and distribution as Carlo suggests would have made this a much easier prospect.

The reality in 2007 that no one figured out in the previous four years is that the "V" in MVNO needs to be light grey. The one thing we did know but chose to ignore was that the US market was saturated and the incumbents were focused on retention and the cost per new sub was going through the roof.

There are a number of other issues that put Disney Mobile on its knees but I'd better save that for another day.

IMHO, the real question here is what does the future look like for potential MVNO players?

What's the difference between selling your TV content on the incumbent operators and going down the MVNO route? Higher level of customization, differentiation, ongoing control over your future offerings. It's down to that, and in that, it's a tough play, because indeed, you have to say goodbye to your (presumably) post paid, locked phone operator, possibly pay a penalty and shoot over to the new MVNO. Is that a realistic subscriber behavior? Do they have what it takes for someone to pick their phone?

Also very interesting, can we test the issue of geography in this? Is the fact that both failed MVNOs operated in the highly operator-controlled US market have anything to do with that? What's the future look like for Blyk? (maybe bad example as they took on both MVNO and ad-based model)

It's certainly not one-dimensional, but it would be interesting to look closely at success criteria for MVNOs.

I understand it wasn't about content. But going down the MVNO route limits the potential of the business because it takes significant effort to get people to switch away from their existing operator, whether it's because they're locked into a contract, simple stasis, they don't like the phones on offer, or plenty of other reasons. That's the point I'm trying to make. Just as with ESPN Mobile, doing this as an MVNO, instead of selling it through operators (for whatever reason, business or techical) made things pretty difficult.

If it was "kinda hard" to do except as an MVNO, it was probably doomed from the outset.

Again, Disney Mobile wasn't like ESPN Mobile, it wasn't about selling content (although we would certainly have needed the ARPU to stay alive, it wasn't the first or main hook). Disney already has a division specifically to sell content to many operators.

Let's just say it's kinda hard to sell lock-down and alerting services through operators that require custom back-ends at the operators and custom software on the phones. And that's really all I can say at this point, except that there are interesting post-mortems to be written, both business and technical, about why DM failed.

Perhaps, but it's the same sort of thinking that doomed ESPN Mobile -- there's no reason that this sort of offering should have been done on an MVNO basis, instead of sold through operators. This is something Disney should know: its TV channels, for instance, are available through a wide range of operators, not sold individually through other, separate channels directly to viewers.

Disney Mobile wasn't really about pushing content, the model of focussing on that was left behind early when focus testing pointed out it wasn't that compelling for paying customers. Disney Mobile's main thrust was the Family control applications like location monitoring, spending limits, usage limits, and priority SMS that would take over the phone so a child had to acknowledge receiving and could never say 'got lost' in the stream. Those tested fantastically.

The problem was getting the actual handsets in the customers hands, as this was a high-provisioning product that couldn't just be sold in a blister-pack on a rack, and making the financials work to the scale the company was at and the customer liked.