All Hands on Deck

September 27 was a cool, gray morning in the commercial district of the San Fernando Valley’s North Hollywood district. At the Starbucks situated strategically across the street from the commercial office building named after its street address, 5161 Lankershim, baristas were busily filling coffee orders for the hundreds of office workers who call the 178,000 square-foot office complex home during the day.

The 5161 Lankershim building is home to the Walt Disney Internet Group (WDIG), a division within the Walt Disney Company’s Media Networks division, which, until last Thursday, included Mobile Virtual Network Operator (MVNO) Disney Mobile.

That morning, as Disney Mobile workers sat down at their desks and opened their e-mail, they were greeted by an office-wide memo asking all Disney Mobile staffers to assemble at ten o’clock in 5161’s atrium, the only space in the building large enough to accommodate them all. The message didn’t say anything else. It didn’t have to.

At a little past 10 a.m., George Grobar, senior vice president and general manager of Disney Mobile, and Steve Wadsworth, president of WDIG, climbed up on tables to address the assembled crowd. Connected via conference call with Disney Mobile’s satellite offices in Seattle, Washington, and simultaneously announced by a local HR staffer at the customer service center in San Antonio, Texas, the pair reluctantly confirmed what everyone already knew.

For weeks there had been ominous signs and indicators all around the office that the end was near for Disney’s mobile networking venture.  Negotiations around key distribution deals had dragged on forever. Long-term projects, like the fourth quarter Christmas marketing plan, went completely unaddressed, and the termination of ESPN Mobile the preceding year had hung over the office like a dark cloud.

With a mixture of pride and extreme disappointment, an obviously emotional Grobar praised his staff on the efforts done. He and Wadsworth went on to explain that despite everyone’s best efforts, the risks and cost of continuing the fight to turn Disney Mobile into a viable MVNO far outweighed the potential benefit and return to the company.

In the Beginning

Unlike the wholesale anger and animosity that followed the shuttering of Disney animation facilities around the world—following a decade of disastrous decision making by legions of so-called creative executives—the announcement of the closing of Disney Mobile has been met more with a sense of deep regret on the part of nearly all those involved.

Even Disney Mobile management admits mistakes were made in running the company, but very few people connected with its operation are eager or quick to point the finger. Instead, many say that Disney Mobile was at least good at, if not quick enough at, learning from its mistakes.

Initially, there were some cultural problems mixing the management and operations style of an entertainment giant with those of the managers and staffers recruited from the mobile telecom industry.

“There was an awesome level of talent there,” said a former mobile telecom manager recruited by Disney Mobile, who like everyone we spoke with asked not to be named. “But the thinking was different. Day-to-day, it was always about what would make my manager happy and what would his boss like, and so on, and so on, all the way up to Bob (Iger). In the mobile business where I came from, it was always about what would the customer like, first and foremost.”

From the beginning, Disney Mobile had a problem reaching its core demographic: young affluent families with children. Disney corporate policy prohibited them from marketing directly to children. “This put the Disney Channel out of reach from the beginning,” said a Disney Mobile staffer. “And, that was just the market we were looking for!”

Additionally, underlying service provider Sprint wasn’t too eager to share its retail floor space with Mickey.

Initially, to counter these problems, it was decided that in addition to offering an inexpensive Disney-branded cell phone every member of the family could own, Disney Mobile would offer a set of services, “with Disney magic” that families truly wanted.

Online sales ads for the now suspended Disney Mobile phone service.

“Besides,” as a former mobile services creative manager said, “the real money’s not in selling phones and basic services. It’s in the add-ons and up marketing ringtones, wallpaper, and the like.”

“Knowing that kids want ‘real’ cell phones (like the ones mom and dad use), we tested everybody,” the creative manager added. “Young boys begged us, ‘Please don’t put Mickey Mouse on it (the phone) or I’ll get beat up’. Traditional Disney content and bright colors on the plastic just weren’t a winner. Services were.”

He went on to say that Disney Mobile research showed that mothers really liked the idea of being able to use the phone’s built in GPS to locate their entire family with the touch of a button, along with being able to “manage” who their children could and could not call and text. Additionally, they also liked having the ability to send text messages to their children, which could neither be ignored nor removed without first acknowledging that the message had been received and read. “No more excuses for missing dinner.”

“Have you ever seen the opening screen on the average cell phone?” a systems designer asked. “Its an intimidating list of menu choices. We got it down to just five easy-to-read menu items, each with an easily understood graphic.”

Even the monthly bill underwent months of extensive research and design to give it just the right Disney look and feel.

Disney research also showed that “Moms tend to keep their address books in their heads,” or, like millions of other cell phone owners, scroll through the most recent calls looking for a number. The reasoning being that the average cell phone users find the address books on their mobile devices too troublesome to program. So, Disney Mobile offered its customers a preprogrammed address book with all the family’s numbers.

All of this family-oriented service came at a cost…and not just for using the phone.

“The preprogrammed address book knocked us out of the big box stores,” a marketer for Disney Mobile said. “It meant we couldn’t blister-pack the phones and leave them on an end cap. The address book had to be programmed by a reliable rep for the (Disney Mobile) service.”

Internet sales were hurt because parents wanted to be able to see and touch the product before buying it.

These problems left Disney Mobile with the more traditional cell phone marketing and distribution options, “mall kiosks and in the front doors.”

“The cell phone guys (within Disney Mobile) thought mall kiosks were a great idea,” said the marketer. “The Disney people kinda looked down on it as being a down-market thing and had to be convinced slowly.”

After the Disney Company’s earlier experiences with the Disney Stores, no one was in a hurry to suggest to the Mouse’s corporate management that the company return to America’s shopping malls with a series of little carts selling cell phones.

Disney Mobile never completely abandoned the mall kiosk idea, but did put the bulk of its efforts into what became known among staffers as “The Doors Project.”

Sprint had been reluctant to allow Disney in the doors of its nationwide chain of Sprint stores, preferring instead to use its retail floor space to market its own line of phones and services.

However, several of Sprint’s rivals were getting a leg up on the carrier by offering family plans, something Sprint did not have in place, while the operator was also still struggling with problems arising from integrating newly acquired Nextel.

“The Deal” was born: Disney Mobile would get around its marketing and distribution problems by becoming Sprint’s Family Plan.

Ultimately, however, it was the risk benefit analysis of the costs associated with putting The Deal together that led to the inevitable conclusion that after 26 months of operation, both time and money had run out for Disney Mobile. The decision was made to end the service effective December 31.

Competition began offering its own "family friendly" phones and service.

Back at 5161

At the conclusion of the 10 a.m. all-hands meeting in the atrium of 5161 Lankershim, Disney Mobile’s employees were told to return to their desks and await further details regarding their status. When they returned to their cubicles, they found e-mail messages confirming that they either were to be laid off immediately or kept on until the end of the year as part of a skeleton crew to assist with shutting down the service.

Wave One, as those to be laid off immediately dubbed themselves, was so large that like the all-hands meeting, it, too, was held in the atrium of 5161 Lankershim.

This time, a profoundly unhappy George Grobar informed his workers that they would remain on the payroll through November 26 with full benefits, and that they need not return to the Disney Mobile offices during that time. He went on to say they were free to seek employment elsewhere, or to come into the offices and use the Walt Disney Company’s internal network to look for work within the Walt Disney Company. Additionally, Disney Mobile would keep their employee e-mail accounts active, for communication within the company, until October 12.

At the conclusion of his remarks, Grobar asked if there were any questions. The atrium of 5161 Lankershim was still and quiet. Finally a hand went up, and a young woman asked, “Will our silver [Disneyland] passes still work?” The tension was broken and everyone laughed, and all present agreed that now after months of hard work, they finally had the time to go to Disneyland.

Grobar advised his workers to keep their company IDs, and he told them their Disneyland passes would work through the official end of their employment on November 26.