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Disney Folds Phone Venture; Seeks ‘New Business Model’

The Walt Disney Co. said it will shut down its U.S.-based mobile virtual network phone service at the end of the year, concentrating instead on “a new business model” for content and services that may be offered through a partnership with a major U.S. wireless carrier.

The Disney Mobile service, which launched to great fanfare in June 2006, was geared around a set of features called Family Center. These let parents see the location of a child’s handset on a map, limit when and how their children’s phone are used, and set limits on expenditures in terms of voice and data.

The service, offered in a so-called mobile virtual network operator arrangement via Sprint Nextel, also provided content for the phones including wallpaper, ring tones, games and background themes featuring such classic Disney franchises as Mickey Mouse, Bambi and Dumbo as well as more recent ones like The Cheetah Girlsand Pirates of the Caribbean.

Walt Disney Internet Group president Steve Wadsworth said in a statement that the “MVNO model has proven, as we’ve seen with other companies this past year, to be a difficult proposition in the hypercompetitive U.S. mobile phone market. In assessing our business model, we decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area.”

Wadsworth appears to have been alluding to two other high-profile virtual-phone ventures that folded in the past year: Disney’s own ESPN Mobile, which was cancelled last October, and Amp’d Mobile, an MVNO aiming at young men that closed shop this summer after filing for bankruptcy. ESPN has since relaunched its mobile application, which provides real-time news, scores and on-demand video clips, in an exclusive deal with Verizon Wireless.

Disney said current customers will continue to receive service and support until Dec. 31, 2007, and the company will offer a reimbursement program for eligible customers. Disney said it will provide additional details of the reimbursement program no later than Oct. 8.