Disney CFO Thomas Staggs didn't quite write the Disney Mobile "virtual" wireless carrier obit today, but his message was clear: it's sucking wind. At the Merrill conference in Marina del Rey, Staggs said Disney has seen "some challenges" distributing its family-oriented MVNO, and the company is "in the process of evaluating where we sit." Staggs said the service has received "strong response" from parents, but that the MVNO business needs scale to be successful (which it lacks). He said it would be too early to project the MVNO's losses in 2008: the company will analyze the MVNO during its budget process and "decide just what our plan is going forward."
That hardly sounds like a ringing endorsement of the Disney MVNO model.
I have to admit that for years I thought the MVNO model made perfect sense. It looked to me a lot like the long distance re-seller model of the 1980s. And in the early 2000s, Virgin seemed to show that MVNOs could post solid growth numbers.
Since then, however, few MVNOs have been successful. OK, that's putting it mildly. Most MVNOs have burned out like a dot-com in the first quarter of 2001. ESPN, also a part of the Disney empire, shuttered its MVNO and even Helio, Sky Dayton's much-hyped play in this sector, recently trimmed jobs.
In fact, even Virgin Mobile's subscriber numbers may not be as strong as the wireless industry assumed. If Virgin Mobile isn't doing that well, then what hope do these other MVNOs have?
What do you think? Is the MVNO business model dead?