ESPN Eyes Mobile Phone Market
The sports media company ESPN will introduce a branded mobile service and cell phones next year in the U.S., becoming the latest in a growing number of companies entering the mobile market on the strength of established audiences.
The ESPN Mobile service will run on Sprint's national cellular network, but ESPN will take care of pricing, packaging, billing, customer relations, distribution, and other operations, according to a statement by the companies.
Some ESPN content is already available on phones via Sprint and other mobile operators, but the ESPN service will offer unique content, according to the companies. In addition, ESPN will make it easier to access the sports content, which will include streaming audio and video in addition to news, commentary, analysis, statistics, ring tones, graphics, photos, and logos. ESPN is majority owned by ABC, a subsidiary of Walt Disney.
What ESPN is doing may point to the future of mobile telephony as handsets and network speeds allow for richer multimedia services, according to industry analysts. "For the first time, we have a company that is content-focused trying to be a carrier, rather than a carrier trying to be a content provider," says Eddie Hold, an analyst at Current Analysis, in Sterling, Virginia. "We're going to get to the point where people are going to buy based on content, not voice."
"Voice will just be thrown in for free at some point" though that day is years away, says IDC analyst Shiv Bakhshi.
The ESPN deal announced this week is just the latest MVNO (mobile virtual network operator) arrangement Sprint has made with a third party. MVNOs pay a mobile operator to use its network but brand and manage the service by themselves.
Such arrangements can work well for Sprint, Bakhshi says, citing the example of Virgin Mobile USA, which sells branded phones and a prepaid service based on Sprint's network. Sprint does not have a prepaid service of its own.
"Traffic is being generated without Sprint having to acquire a customer, educate a customer and everything else," Bakhshi says. For ESPN, it may find that its brand inspires more subscriber loyalty than most mobile operator names, and the desire for a better multimedia experience may drive subscribers to buy new and better handsets, he adds.
However, there are dangers, according to Hold. The Virgin deal has worked well, but ESPN appeals to a broader potential audience that might otherwise be direct Sprint subscribers, Hold says. What's more, if ESPN does draw a large and loyal customer base, the company could turn around when the contract is up and demand a bigger chunk of the revenue in exchange for staying with Sprint, he adds.
ESPN is well-suited to a branded mobile service because there is always something going on in sports, Hold says. Other brands, such as Disney, might not be able to come up with enough compelling content, he says.