ESPN should "throw in the towel" on its branded mobile phone service, according to Merrill Lynch analyst Jessica Reif Cohen, who says its proved to be a failure, reports
Mediaweek. During Super
Bowl XL, Disney launched the mobile service with considerable fanfare, but several price cuts later, the sports outfit is still struggling to add paying subscribers. The original ESPN Sanyo handset,
which launched at $399 (yikes), is now available free of charge--after a $29 mail-in rebate. The price of its Samsung model also dropped as low as $99 in April. Reif Cohen said in her research note,
"the model does not appear to be a particularly attractive use of capital," as the reseller business usually offers a low ROI. Michael Kopelman, her co-author, estimates that Mobile ESPN will lure
30,000 subscribers over the course of the financial year--well below the company's estimates of 240,000. Along with expected losses from a second Disney-branded phone service, the analysts estimate
that the Mouse House will lose $135 million on its mobile experiment in 2006. It may be premature to write the obituary of Mobile ESPN and other branded phone services, particularly since it
underestimates the brand value of plastering your company's image on a handset. The analysts point out that this could be the reason Disney moved into the mobile phone biz in the first place. For its
part, ESPN says it has no plans to discontinue the service.
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