MVNOs need to do more than just branding

For Mobile Virtual Network Operators to succeed they have to be revolutionary.

Mobile Virtual Network Operators continue to sprout up left and right, building on the success of Virgin Mobile (the progenitor of the MVNO craze) and more recent offerings like ESPN Mobile. Perhaps the biggest name to get in the game recently – not unexpectedly considering it shares corporate ties with ESPN – is Disney and their new Disney Mobile offering.

We think that Disney’s service is a good example of what’s missing with many MVNO offerings today – a real sense of obvious differentiation from the service bundles that all wireless providers are offering directly to their customers. This differentiation can come in part from a strong brand identification and ties into the user community that the MVNO’s “parent” brings to the table, but to be sustained it needs to tie new and innovative services into this brand and into this user base. In other words, a “me too” bundle of services with just a strong brand laid on top probably won’t be enough to get you from here to there – with there being a long term profitable customer base.

Disney has not laid out a long-term differential advantage here. Which is not to say that the “Family Center” feature pack isn’t an interesting bundle of services – it is, and we’re big proponents of services like the family alerts and the family locator features. But most or all of these features are either already available or will be soon from competitors that have a deeper, bundled relationship with their customers. In a nutshell, if Verizon or Sprint offered me the same features directly, why would I choose Disney when I can get the same services as part of my Quadruple Play offering?

Put another way, there was no Disney in this announcement. No ties to all the things that would differentiate it. Even the logo on the phone is subtle, a nod to how uncool it would be for a teenager to have a Disney phone for sure. Still, where’s the link that makes this Disney? I’m going to bet that Disney ringtones are gratis, but what about exclusive video content, and other such things. We expected the cell phone to map to the Tamagachi craze, where a cell phone became something a kid might use to keep her Toontown characters alive. Or how about a mobile wallet function that means that the family won’t have to use cash at any Disney locale? Or how about a link to the ESPN MVNO in some fashion – to bring dad onboard within an overarching “family” of services. Where’s the stickiness of this offering?

Disney is going for the right thing here – becoming a whole family solution provider by creating a “family community of interest.” But in order to achieve a family community of interest, the offers need to reach far deeper into the day-to-day communications, interactions and activities of a family. That’s what makes a truly “sticky” experience.

A family community of interest needs to integrate with neighbors and schools and doctors. It needs to provide alerts about baseball game cancellations and kids homework assignments. It needs a lot more than merely tracking the kids and shutting off their phones. With what’s been shown to date, Disney has missed a big opportunity here to really set out a true lead in the market that would be hard to beat. As it is, they’ve announced a future product with no pricing and features that everyone will have by year-end.

So we’re a bit disappointed that this is an evolutionary announcement. We think for MVNOs to succeed, they have to be revolutionary, and Disney missed that opportunity because this is an obvious evolutionary path that all the wireless companies are on.

Copyright © 2006 IDG Communications, Inc.

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