Disney Hangs Up on MVNO

By Tara Seals

On Dec. 31, Disney Mobile will officially turn back into a pumpkin. The kid-focused and parent-friendly MVNO, which runs on the Sprint Nextel network, announced last month it would be turning off service a scant 18 months after launch. The Walt Disney Co. is bowing out of another MVNO venture this time its property Disney Mobile.

The company cites distribution problems as the culprit for the flame-out; most notably, the inability to secure channel deals with large retailers. One issue was the phones address book, which requires a rep to program it a task no big box store was willing to take on, spokespeople said. That left the MVNO with Internet sales, mall kiosks and Sprint dealers, none of which proved up to the task of servicing the target niche.

Some employees also noted that a well-intentioned corporate policy against marketing the service directly to children made it difficult to reach Disney Mobiles core demographic by eliminating the Disney Channel and most other mass-media awareness avenues from the picture.

The other problem lies in the dangers of having to educate the market on something new, thanks to Disney Mobiles overwhelming tailoring of the phones and service to children. Disney Mobile was built around specialized GPS-enabled phones for tweens and Disney fans of all ages, with Web-based parental controls, child locator services, a nuclear unit-oriented family center, a focus group-tested five-button GUI, and exclusive Disney content and applicationsall of which may be a bit overwhelming for a parent just looking for a way to keep in touch with the kids.

Others have gone down the same path and failed. Verizon Wireless launched the now-discontinued LG Migo, a cute little green number with antennae and a limited palette of functionality, aimed at the 8- to 12-year-old set. And AT&T Inc. had the Firefly service, targeted to 5- to 12-year-olds with a special, simple, no-number keypad form factor for little fingers. Since being quietly discontinued, a new Firefly is rumored to be in the works, but no launch plan has been named.

In fact, the Big Kahuna in the kids market is another MVNO: kajeet. The kajeet payas- you-go, no-contract service includes the Configurator for programming approved and blocked phone numbers, and basic parental controls such as setting when the phones can be used. But the form factors look like typical cell phones, and other than kid-oriented downloads like games and ringtones, and cute bubble-headed mascots on the commercials, the service is a familiar experience for parents. kajeet has been enjoying ongoing success, making its subscriber goals and recently securing $36.8 million in Series B venture capital funding.

As for Disney, it may be out of the phone business for good. Disneys other MVNO property, ESPN Mobile, made headlines last year, tanking just nine months in after subscriber numbers failed to materialize. The company instead began licensing the ESPN Mobile content to other carriers, a plan it says it will enact with the Disney content. Some speculate that Disney Mobile simply will morph into becoming Sprints family service, but no plans have been announced.