The Embarrassing Failure That Made ESPN a Mobile Juggernaut
Mobile ESPN may be the biggest failure in the company's history, but it also set the foundation for ESPN to dominate a lucrative industry.
"Your phone is the dumbest fucking idea I have ever heard." That, according to the book These Guys Have All The Fun, was how Steve Jobs introduced himself to George Bodenheimer, then-President of ESPN, during a 2006 Disney board meeting.
Jobs was talking about Mobile ESPN, the company's ill-fated attempt at launching a sports-centric mobile service. The technology of the time limited phones to basic functions and an agonizing web-browsing experience. ESPN wanted to change that. Not by bringing larger screens or email to the market, but by doing what ESPN does best: bringing sports to the masses.
Using the Mobile Virtual Network Operator (MVNO) model, in which a company leases excess cellular capacity—in this case, from Sprint—ESPN built an entire business on creating a wireless service specifically for sports nuts, who would have to buy a special phone on which they could receive score updates, launch GameCast, browse ESPN.com content, and a host of other features.
For the privilege of carrying sports in their pockets, customers had to fork over as much as $300 for the phone itself, and between $65 and $225 per month for content.
"The phone was a stupid idea," former ESPN Chairman Steve Bornstein said in These Guys Have All The Fun. "I told that to George [Bodenheimer] and to John [Skipper, then CEO of ESPN]. It was a big bet that was bound to fail."
He was right. Mobile ESPN was a commercial disaster, perhaps the largest and most public that the company—whose trajectory has been relentlessly upwards—ever faced. According to BusinessWeek, ESPN sunk $150 million into Mobile ESPN, including a reported $30 million on a Super Bowl ad. Despite the investment, the project reached only six percent of its sales target. Rather infamously, Deadspin asked its readership to email them if they had the service. They received one reply. Deadspin would later claim that their readership during an average afternoon hour was larger than the entire Mobile ESPN customer base. ESPN declined to comment on sales figures.
By the end of 2006, less than a year after launch, ESPN shut down the project.
Given all this, it's easy to point and laugh at this massive stumble by the Worldwide Leader. It's just so obvious that ESPN never should have tried this, right?
Some people inside ESPN don't see it that way, even after the massive write-off the project became. "I love it when people want to talk to me about how the phone was a flaw or a mistake or a black mark on my record," Bodenheimer said in These Guys Have All The Fun. "I don't look at it as anything like that. It was a tremendous learning opportunity in a portion of the sports media business that's going to be huge."
Bodenheimer has a point. According to the people I spoke with at ESPN, they've been using technology originally built for Mobile ESPN ever since its launch. Even the latest updates to the ESPN mobile platform across Android, iOS, and their desktop site reside on the foundation laid by the mobile network.
Consider Mobile ESPN's feature list: push notifications for score updates, an entire ecosystem and software structure for keeping up with the sports world, a specific program for browsing news and updates, reading articles, watching video highlights, and even streaming live games; all on your phone. It sounds an awful lot like how people use their smartphones today. It's no surprise Mobile ESPN didn't catch on, but it also shouldn't come as a surprise that Mobile ESPN gave the company a head start in the mobile sports world, a market it currently dominates. In January 2015, 72.5 million unique users accessed ESPN web and app content on mobile devices alone, a sports category record, according to an ESPN spokesman.
"It was really a spectacular achievement in terms of product," Aaron LaBerge, ESPN's Chief Technology Officer, told me over the phone. "It's one of the best things we've ever done in my opinion."
Back in 2005, when the project was in development, a whole host of back-end issues had to be solved. For starters, the data had to come from somewhere. Back then—this was when Facebook was still The Facebook and it looked like this—ESPN didn't have a unifying data/software architecture that allowed different customer-facing products to pull from the same information. Each output, be it ESPN.com or the Bottom Line on the networks, was pulling from its own, individual data source.
With the development of Mobile ESPN, LaBerge and his team built a framework that allowed the various products to pull from the same data sources, something few other companies were doing at the time. Not only did this make Mobile ESPN function seamlessly—when Sprint's network would cooperate—but it also created an infrastructure on which ESPN's digital arm could rest for years to come. "It sounds pedestrian today," LaBerge recalls, "but those kinds of architectures, around software and data, did not exist at that time."
The ESPN team also had to create pocket-sized video. Remember what those flip phone screens of the mid-aughts were like: miniscule, pixelated, intended to display basic menus, text, and maybe a grainy photo or two. In order to show the detailed graphics and videos Mobile ESPN required, the ESPN team not only had to find hardware to suit, but edit and clip video made for TV down to a much smaller screen. They built a whole set of video production systems just for editing and transcoding TV-quality highlights so they could be visible on a mobile phone. Essentially, ESPN built a custom graphics system just for mobile users.
Then, they had to figure out how to bring these tiny videos to the phone's screen. To do so, ESPN essentially created an app for a phone before apps were a thing. LaBerge still exhibits pride when recalling the app's aesthetics. "If you actually looked at our app at the time of where the mobile landscape was like, it was amazing. Beautiful, high-res graphics, use of color, use of imagery all over the place, integrated video. Everything about it was customized. It looked very much like a miniature version of what some of our apps look like today."
He's not the only one who thought so. Deadspin consistently monitored Mobile ESPN, which came to fascinate its Editor-in-Chief, Will Leitch. When the product launched, he wrote, "First things first, it's difficult to deny that what the phone offers is cool. The video and interface are unlike anything you've ever seen."
So why did Mobile ESPN fail? The main point to keep in mind is that the phone's commercial failure actually had little to do with its technological shortcomings. After all, the service was at the cutting edge of the cell phone experience, which at that time was known more for frustration than communication. "We felt we could just completely hyper-focus around the experience for a sports fan and that would ultimately lead to a successful business," LaBerge recalled, realizing in hindsight the market didn't function that way.
Leitch nailed it on the head when he wrote at product launch, "The issue is not with the service itself, which is impressive; the problem is that ESPN is demanding its customers turn over their entire cellphone world just to play along. Not only do you have to use their service (Sprint), you have to use their phone. The entire thing is on their terms."
And the phones they offered were clunky—in stark contrast to the sleek, best-selling Motorola RAZR. The phones had to be in order to meet the steep hardware and battery life demands of the service. Unsure of the market, ESPN couldn't commit to a large order that might justify more careful, customized design. So they were left with the tough task of selling an ugly phone.
LaBerge and his colleague, John Kosner, Executive Vice President of digital and print at ESPN, both see the hardware side as central to the product's commercial failure. "Our lack of understanding of the hardware business in general was very evident," Kosner told me. "We just did not have the expertise to be making the decisions in terms of models, number of devices to order, where that was headed, we had no scale or leverage in that industry."
Only a few months after launch and with sales close to zero, the handsets tanked in price, running at a fifth of the original list price. About a year later—six months after ESPN Mobile shut down for good—the man who told the President of ESPN that his plan was the dumbest fucking idea he'd ever heard, revealed a slightly less-dumb phone: the iPhone.
As Jobs realized, people wanted to use phones for more than just sports. It wasn't really worth shelling out hundreds of dollars up front along with a steeper monthly bill just to be the first of your friends to know the Cardinals scored a run in the bottom of the 8th to go up 7-2. LaBerge summarized the Mobile ESPN project well when he said, "our entire experience was centered around sports. What we found was people cared about other things as well."
It all seems so obvious in hindsight. But in those pre-iPhone days, the only thing people knew about the future of cell phones was that they would get better and become more integral to our daily lives. Mobile ESPN saw a future in which cell phones were vital—they just didn't quite see how that future would work.
Once the app ecosystem launched on the iPhone, ESPN was in prime position to debut software for it, thanks to the systems they developed for Mobile ESPN. "We've been applying and extending the work we did on Mobile ESPN pretty much from the day we shut down," LaBerge says.
Kosner believes the decision to prioritize video was what made Mobile ESPN so revolutionary; and, paradoxically, unsuccessful. "We made a decision which I thought, was visionary and ahead of our time, that we were going to prioritize video. That affected the handset that we chose initially and while mobile video is exploding today, it wasn't nine years ago. We wound up having to do a bunch of different things in order to have the ability to have video be so front and center. That is what you expect from ESPN but not necessarily how people used cell phones in 2006."
To be fair, ESPN would likely have developed these technologies later without the steep price tag. It's entirely possible the lessons learned from Mobile ESPN could have been more easily acquired at a later date when technology improved and consumers were ready.
But considering ESPN revenues are in the billions every year, the loss barely registered. It was a risk, big by most standards, but not by ESPN's, especially when compared to the startup acquisitions tech companies are using as stand-ins for research and development. Nowadays, Google will blink twice and drop a billion dollars on an already successful company like Nest or Waze.
This might be the best way to think of Mobile ESPN's legacy. It was a relic of the old R&D model, one of the last times a major corporation took a large risk on a new product in a crowded marketplace by developing its own technology.
Talking with LaBerge and Kosner, I got the feeling that Mobile ESPN, aside from being one of ESPN's greatest financial missteps, is also one of the purest representations of its ethos. The only thing ESPN hates more than losing money is being beaten.
Whether Kosner meant to or not, he gave me this notion when talking about ESPN's philosophy. "John Skipper's operating philosophy was we were never going to be flanked by anyone or anything. And this continues to this day. There's a very aggressive philosophy in terms of having ESPN be where fans are."
ESPN saw mobile phones becoming an ubiquitous aspect of modern life and knew it had to be involved. Some of its answers anticipated future trends, but were too far ahead of the times. Other answers were simply wrong. Either way, it hardly mattered. With ESPN, it hardly ever matters.
"If you say that the phone was proxy for being willing at times to take big risks that you believe in," Kosner says, "then I think we would do it again."