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Free Services Stimulate Flat U.S. Mobile VAS

According to the Strategy Analytics, the exclusive availability of the ESPN MVP sports application to the Verizon Wireless V-Cast users -- across a range of popular handset models, and for free -- represents a strong boost to Verizon Wireless U.S. service offering.

I believe that it's most likely a response to the consistently slow uptake of wireless value-added services (VAS). U.S. mobile phone subscribers should anticipate even more "free" promotions -- as U.S. wireless service providers attempt to stimulate their otherwise flat demand for VAS.

Verizon Wireless has made ESPN's MVP application included as a free download to subscribers paying $15 per month for its V-Pak offering. The application, which has been developed for BREW handsets, provides deep integration with ESPN.com and offers real-time sports news, scores and information, personalization for favorite teams, scoring alerts, video, and virtual game illustration.

Senior Analyst, Nitesh Patel, notes, "Given the strength of ESPN content, this exclusive deal represents a strong positive for Verizon Wireless, which should be attractive to both casual sports followers and fanatics typically targeted by ESPN Mobile. Provided that ESPN MVP can deliver a user experience that matches its online service, and both companies effectively market the proposition, Mobile ESPN will add significant value and stickiness to the Verizon Wireless V-Cast offering." At least, that's the intent.

David Kerr, Vice President of the Strategy Analytics Global Wireless Practice, added, "Partnering with Verizon Wireless provides ESPN with a high quality wireless broadband network, extensive distribution presence and massive marketing muscle. Allied with its recent Vcast TV offering, Verizon Wireless continues to raise the performance expectation bar for U.S. mobile users. Infotainment services, including video, audio, sms/mms and games will be a rapidly growing demand segment over the next five years with 2011 revenue forecast to be over $10 Billion." At least, that's the hope.

As you may recall, unable to attract enough customers, Mobile ESPN shut down its MVNO mobile phone service offering aimed at sports fans at the end of 2006. Despite carrying exclusive material, Mobile ESPN was unable to compete with other U.S. national carriers. "Getting consumers to abandon their current calling plan and switch to ESPN proved to be harder than we assumed," said Salil Mehta, executive vice president for ESPN Enterprises.

The Walt Disney Company, ESPN's parent, invested $150 million in Mobile ESPN and a Disney-branded phone service. While no details were released about the final cost of the failed MVNO service, several analysts had labeled the prior ESPN experiment as a major setback for Disney's wireless service plans.

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