The last of the boutique MVNOs continues to maintain a grip on solvency, but just barely. As MocoNews reported, Helio saw its net loss jump from $192 million to $327 million between 2006 and 2007. Yet its revenues have more than tripled and its subscribers base continues to grow, settling at 180,000 by the end of 2007 (click here for the full Helio report in EarthLink’s annual 10K filing with the SEC). The more Helio grows, the more it’s costing its parents, SK Telecom and the already financially harried EarthLink.
All of Helio’s fellow specialty MVNOs have thrown in the towel. Mobile ESPN called it quits in September of ‘06. Bankruptcy deflated Amp’d Mobile last summer. And last fall, Disney Mobile shuttered its doors. There still appears to be life in the MVNO model. Virgin Mobile is still chugging along. In fact it added 510,000 subscribers in 2007, bringing its total to 5.1 million customers. But there’s a big difference between Virgin and the boutique operators. Virgin focuses on a demographic, yes, but it’s a broad demographic ranging from ages 15-34, and its primary value proposition is prepaid service. The Mobile ESPNs, Amp’ds and Disney Mobiles of the world drilled far down into specific segments, not just targeting a demographic but specific lifestyles: sports fanatics, urban hipsters and active families with young children.
The problem with those type of business models is they depended on two key factors. First, they relied on selling an image or a lifestyle. In the case of Amp’d, it was an image of trendiness. In the case of Disney, the company was trying to build on the Disney ideal of family. The second factor, however, is the trickier one. They had to offer services that weren’t available from other sources in the market. That’s what killed them. Just one week after Disney offered its innovative family tracker service, Sprint launched the same application. While Amp’d produce unique and compelling content, the majority of its music, games and video were readily available on other carrier decks. And while ESPN’s sports portal was definitely innovative, much of the content within was available through dozens of other sites on the mobile Internet, including ESPN’s own WAP site.
So that brings us back to Helio. It’s built a lifestyle image around its brand targeting the tech savvy, the gadget-oriented and the always connected. It modeled its value proposition around parent company SK Telecom’s data services in Korea, which were far more advanced than the data services available in the U.S. For a while it maintained that edge, offering applications that weren’t available over any operator’s deck such as a first-of-its-kind all-access MySpace portal, but over the last year Helio’s first-to-market advantage has been whittled away. While it took almost a year for other operators to follow-up on Helio’s implementations of MySpace and Google Maps, barely a month passed before Helio’s exclusive on the full YouTube video catalog lapsed.
It seems that content providers aren’t as keen to use Helio as the long-term testbed as they once did. And if new applications become available on any operator’s data platform immediately after they debut on Helio, then Helio’s basic value is questionable. Helio can continue to push its tech-savvy image, but as we’ve seen with the other MVNOs, lifestyle alone can’t keep them in business.