ESPN Mobile: A Deja Vu Dichotomy

Sharon Armbrust | October 04, 2006, 07:13 AM

As Disney pulled the plug on the ESPN Mobile MVNO a week ago (9/28), most observers agreed the connection between buying a cellphone used primarily for voice and buying an ESPN mobile TV service were conceptually too far apart to be marketable. But the problem may be even more fundamental than that.

The management at Disney might have saved themselves an estimated $135 mil. in losses and a big marketing/PR stumble had they looked again at some old statistics related to the regular ESPN channel--one of the highest rated and most valuable cable networks in the country.

Back in 2004 as the FCC debated the benefits of forcing cable MSOs into an a la carte business model, Deutsche Bank commissioned a consumer survey to gauge TV viewer interest in paying a la carte for ESPN.

For starters 57% of viewers said they watched the channel sometimes, 16% all the time and 27% never. When asked how important the channel was to them, 45% responded somewhat important, 18% very important and 37% not important at all.

Then came the conversion questions: What action would you take if it were dropped from the program lineup? Suddenly 77% said they wouldn't do anything and the contingent who would consider switching (btw. DBS and cable) was down to 16%. The most important question from a business model point of view--What amount would you pay for ESPN a la carte?--drew a response from 72% of those polled that they wouldn't pay anything . The next largest group was the 9% who would pay $2/mo. And higher amounts of $5, $10 and $15/mo. drew 8%, 3% and 3% of the votes respectively.

Now ESPN was and is a major draw for the cable and satellite video businesses, and the costliest network for both cablecos and satcos (an expense which they of course pass through to customers within the subscription package). But the standalone buy decision for even such a staple of the TV world, where people spend 7+ hours a day on average, is a tough one, as the DB survey confirmed.

ESPN Mobile plunked itself into a mobile world where <2% of the base is watching TV, not >90% as in the general population. But regardless of the fact that it may be a mobile video-centric service before its time, the lesson from the living room TV set arena is that TV viewers like choice and quantity and browsing. They're used to getting that variety via subscriptions. And there's no reason that will be vastly different in mobile.

Thus, ESPN's second idea--to use its popularity muscle gaining position and exposure and fees on the large mobile carrier platforms, just as it does in the cable/satellite TV world-- would probably have been the right choice in the first place.