Disney Enables ESPN Fans to Dial In

Walt Disney Co. is again counting on the loyal audience of its ESPN sports franchise to help it establish a toehold in mobile media -- this time with a wireless phone service that delivers news, scores and video highlights.

Mobile ESPN is the latest example of neophytes in the mobile phone market targeting lucrative niche audiences and attempting to peel them away from established carriers such as Verizon Wireless and T-Mobile.

As cellphones mature into mobile multimedia devices, content producers such as Disney are trying to move beyond traditional licensing deals and sell their news and entertainment directly to fans.

Disney’s move into wireless is a sign of the eagerness of Chief Executive Robert Iger to leverage technology to create sources of revenue. Iger recently said Disney’s “road map to the future” lay in combining the riches of its entertainment properties with new forms of distribution.

Next year the Burbank media giant plans to introduce a second service, Disney Mobile, to capitalize on its general entertainment properties.

“Our investments in ESPN Mobile and Disney Mobile are key examples of how we’re placing bets on branded content and wireless services to drive a stronger connection with our consumers -- as well as long-term returns,” Iger told Wall Street analysts two weeks ago. “This is one of the smartest things we can do as a company.”

Mobile ESPN, rolled out this month, aims to tackle the sports-addicted audience of Disney’s ESPN cable channels with a manly man’s black phone and a sales pitch that centers on offering men a portable refuge from the women in their lives.

“Now, it doesn’t matter where you are,” blares the Mobile ESPN website. “Shopping with your wife during football season, now you don’t have to miss out on up-to-date fantasy stats.... At your best friend’s wedding, now you can dish him the basketball scores while he’s at the altar.... At your daughter’s softball game, now you’ll know if your team made the final field goal.”

Over the last decade, Disney has built ESPN into the industry’s most profitable collection of cable television channels, a thriving radio network, a popular sports magazine, a restaurant chain and a website.

Mobile ESPN is just the latest extension of the brand. It joins the growing ranks of providers known as mobile virtual network operators. Disney plans to sell Mobile ESPN phones, manufactured by Sanyo Electric Co., and airtime minutes for voice and data services provided by Sprint Nextel Corp.’s national cellular network. Consumers who sign up for Mobile ESPN’s two-year plans would receive monthly statements from Mobile ESPN, not Sprint.

“Disney is looking for a way to grow its top line,” said analyst John Strand, CEO of Copenhagen-based Strand Consulting. “And mobile phones are a huge market.”

But Disney’s service won’t come cheaply. The phone will cost $499, or $399 after a rebate. Monthly service plans range from $64.99 to $224.99.

Marina Amoroso, an analyst with research firm Yankee Group, said the price might be a stumbling block.

“Less than 1% of the market will pay more than $199 for a phone,” she said. “They are really going after a very small market with that type of pricing.”

Salil Mehta, executive vice president of ESPN Enterprises, said, “We think it’s an incredibly competitive price.”

Virtual networks allow companies to target niche audiences without incurring the enormous expense of building their own wireless network. In South Korea and parts of Europe, virtual networks have become hot commodities. In Denmark, for example, virtual networks target fans of soccer teams, and gays and lesbians with “Gaymobile.”

Disney’s entry shows that U.S. companies are picking up on the trend as more consumers turn to their cellphones for text messaging, snapping and sending photos, playing music and even watching snippets of TV. ESPN will continue to license its sports content to cellphone providers including Verizon Wireless, Sprint and Cingular Wireless. Mobile ESPN provides easier navigation and more options, Mehta said.

“This is an extremely significant business opportunity,” Mehta said, explaining that ESPN reaches 97 million people in an average week through its cable television programming and other properties. And male sports fans spend, on average, two hours a day with ESPN.

“These are the fans that we know very well, and ESPN is an important part of their lives,” Mehta said. So much so, he said, that “there are 23 kids in America who are named ESPN.”

Yankee Group’s Amoroso estimates that within five years, virtual networks will capture about 14% of all wireless subscribers, or about 29 million customers, and generate annual revenue of about $10.7 billion.

For now, the major cellphone companies -- Verizon, Sprint, Cingular and T-Mobile USA, a unit of Deutsche Telekom -- control about 80% of the content distributed on the phones, said Yankee Group senior analyst Linda Barrabee. The U.S. cellphone market is close to saturation, she said, as more than 190 million people in the U.S. own the devices.

So instead of signing up new customers, the trick will be to filch customers from the established providers, she said.

“The challenge not only for ESPN but also other entities trying to dance into this space is to convince customers to move to a new service,” Barrabee said. “How do you lure those folks away? Well, ESPN already has an existing base. They’ve got the brand and the content.”

As technology advances, so will Mobile ESPN’s offerings, Mehta said. Within a year or two, live “Monday Night Football” and other sporting events are likely to be streamed to the phones rather than delivered through time-delayed downloads.

Advertisers are watching with interest.

“It’s definitely a way to engage the sports enthusiast,” said Courtney Jane Acuff, wireless marketing specialist for Digits, a unit of Chicago-based advertising firm Starcom MediaVest Group. “And it’s a way for advertisers who use sports as a pillar of communication to become engaged. It’s one-stop shopping.”