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Disney reveals plans for family mobile service

Walt Disney plans to start selling cell phone services to teenagers and their parents as it hopes to carve a niche in the U.S. market.
Steve Wadsworth, president of Walt Disney Internet Group, introduces the Disney Mobile wireless phone service in Las Vegas on Wednesday.Jae C. Hong / AP
/ Source: Reuters

Walt Disney Co. is set to reveal plans on Wednesday to start selling cell phone services to teenagers and their parents as it hopes to carve a niche in the U.S. market by giving parents the option to take strict control of their children's wireless use.

Even while U.S. subscriber growth slows as the number of potential, first-time customers dwindles, Disney and other upstart services, such as its ESPN brand service for sports fans, hope to win customers in very specific markets.

Disney, which is better known for cartoon characters like Mickey Mouse than cell phones, believes it can break into the market by selling to parents who want their 10- to 15-year-old children to have cell phones for practical purposes but who are concerned about how they end up using the devices.

The sales are expected to begin in June.

"This is still a growth stage market," said George Grobar, general manager of Disney Mobile, who believes the venture will succeed partly because far less young teens have cell phones today than the general market.

About 70 percent of the U.S. population already has cell phones. But only about 45 to 50 percent of 13-year-olds have one, according to Jupiter Research analyst Julie Ask, who said parents pay for about 60 percent of teens' cell phones.

"There certainly is a big market for teenagers and parents adding them on to their own cell phone plan," she said.

Established U.S. providers, including four big national operators, are already signing up families. About half of subscribers now pay family discount rates and roughly 60 percent of new subscribers are in that category, according to Yankee Group.

But Ask believes parents who want more control may well be attracted to the number of options Disney gives them.

It will let parents set spending limits or control when their child can use their cell phone, who they can talk to, how many text messages or photographs they can send and cut off most calls if the child has gone over their limit.

They can also check where their child is through a location technology in the phones and can manage the service from their own Disney cell phone or on the Internet if they do not themselves own a Disney device.

"That's something parents are looking for and we haven't see another offering like this one there now in terms of the flexibility," Ask said.

Disney did not say what it would charge for the service except that it would be competitive with other family plans on the market.

But with some services charging as low as $10 a month for each new family member using a plan, Ask questioned if a new service like Disney could afford match these rates.

Executives from the theme park and media company said they hope the service becomes profitable after about two to three years and it may also expand overseas.

"It will be an investor profile over the next two to three years," said Steve Wadsworth, who heads Disney's Internet unit. He also is on the lookout for other countries where it makes competitive sense for Disney Mobile to launch.

"We're looking at a number of markets in Europe and Asia," he said, but noted that the expansion was not a certainty.

Disney Mobile plans to kick off the service with phones from South Korean suppliers LG Electronics Inc. and Pantech Group.

Sprint Nextel Corp., the No. 3 U.S. mobile service provider, will lease space on its network for Disney's service in the hope it can get some revenue from customers that it would otherwise not have been able to reach.

Asked what he expects from the Disney service, Sprint's Chief Operating Officer Len Lauer said it takes about three to four quarters to see how a new entrants are faring. Lauer was speaking at the CTIA wireless show here.