Disney and O2 announce family MVNO in the UK

Carrie Pawsey, Senior Analyst

Disney and O2 have announced an MVNO wholesale deal that will facilitate the launch of Disney Mobile in the UK.

The service will be targeted at 8-14 year-olds and will offer Disney-branded handsets together with restricted calling and Internet access within the parameters set by parents. This follows a similar deal Disney has with Sprint in the US. The US launch is due in June 2006, and the UK operation hopes to launch in time for Christmas 2006.

This deal has been rumoured for some time, so it shows that even in mature MVNO markets like the UK it can still take some time to negotiate the right wholesale deal. This is a good example of a mobile operator using an MVNO as a segmentation tool to reach a segment of the market that is currently under-served. The huge brand value of Disney is obviously much greater than any of the existing mobile operators for that particular segment.

However, we question whether Disney will be able to provide products to please the entire target market? A child's preferences change dramatically between the ages of eight and 14 years-old. Can Disney manage to segment the market and provide handsets and services that will please a princess/Barbie-mad eight year-old as well as a teenager who is very fashion conscious? The other question is whether parents will be willing to update handsets for their children every year as their preferences change, and will Disney have a wide enough range of handsets to please the complete age group? We may find that once the service is launched, the target market narrows.

There is also the question of whether parents want to provide their children with a mobile phone, particularly those aged 12 and under. With many schools banning mobile phones, reports of phone-related bullying and theft, and ongoing concerns over mobile phone health issues, there are many parents that would not want to provide a pre-teenager with a mobile phone.

Nevertheless, Disney has a tremendous brand in the child segment. It also has an established strong distribution channel through its retail stores, and we should never underestimate the 'pester power' of children! We'll wait to see whether the Disney phone becomes the must-have item on UK Christmas lists this year.

Carrie Pawsey is a Senior Analyst specialising in business strategy in Ovum's Wireless Group and has over eight years of experience in the telecoms industry.