The five-channel service, broadcasting BBC One, ITV1, Channel 4 and E4, as well as ITN news, launched on Virgin Mobile last October. It was backed by a £2.5m ad campaign featuring Pamela Anderson, but it reportedly failed to attract more than 10,000 users.
BT blamed a lack of compatible devices for the service, which was only available on Virgin's Lobster 700 phone.
It said in a statement: "While the feedback from users on the service has been complimentary, Movio sales have been slower than originally expected mainly due to a lack of compatible devices from the big brands.
"This in turn has been caused by the fragmented nature of the mobile TV market and hesitancy on the part of the main network operators as they seek to fill their own largely underutilised 3G networks."
BT has also cancelled its contract with the national DAB digital radio multiplex Digital One, which owned the spectrum used by the service. The contract ends next June and the service is likely to be switched off completely early next year.
Last week, the European Commission announced it was backing the DVB-H mobile standard, as opposed to the DMB standard used by the BT/Virgin service.
Both O2 and Nokia are planning to use the DVB-H model. It can carry up to 16 channels but cannot work in the UK until the analogue TV signal is switched off in 2012.
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