Merrill Lynch says it's essentially crazy for ESPN to continue selling its way overpriced, branded mobile phone service. Merrill says ESPN will be lucky to get 30,000 subscribers. ESPN was projecting 240,000 subscribers. Merrill expects ESPN to lose $135 million on Mobile ESPN.
Pricing is a big issue. ESPN's corporate parent, Walt Disney, has had to quickly reduce the price of its branded handset--first made by Sanyo, now Samsung--to $99 from the $399 original price tag.
ESPN's hubris is that it owns male viewers, who are a key and elusive target for advertisers. ESPN will charge a big premium to get to them. The network's belief is that advertisers and consumers will pay anything to be associated with ESPN.
But now it has gone a bridge too far. Male viewers apparently don't want to pay anything to have immediate access to sports scores or enhanced sports videos.
ESPN started marketing the ESPN-branded mobile service during last February's Super Bowl. TV commercials had a dramatic tone at the time, with an ESPN-branded phone appearing on a serious black background and a pounding version of ESPN's "SportsCenter" theme music.
It was as if something revolutionary were going to happen. Technology-wise, this may have been true--but that's all.
Realizing there were serious problems, ESPN shifted its marketing and distribution. TV commercials said the phone and service could be bought through Sprint retail stores.
The tremendous push from the mobile phone industry positions video entertainment as the holy grail. On last night's "Rock Star: Supernova," potential rock stars were huddled around the tiny screen of a cell phone reviewing their performances on Verizon's V Cast service. (Verizon has a branded entertainment deal with the show.)
Excuse me? Can no one find a TV in that big rock mansion where they're staying?
That product placement failed. Better to turn off the two-inch video, and do something substantial: Find a signal that doesn't get dropped, make a call to your buddy, and go to the game.