The world outside the walled garden
How connected entertainment experiences could grow revenues as well as passenger preference
Today, inflight entertainment is both a differentiator and a cost of doing business for the airline industry. It only rarely generates ancillary revenue, but it certainly drives seat sales. It’s an essential part of the cabin experience that in turn delivers the brand. But like airline food, it’s unique to air travel, accepted as distinct from similar experiences on the ground. Passengers leave their terrestrial expectations at the departure gate.
On the ground of course, connectivity has transformed entertainment. We’re no longer passive, but active consumers. We expect to be able to watch what we want, when we want, pretty much wherever we want it. We want to interact with it, influence it and share our response to it instantly online. We expect complete freedom and complete control.
So in many ways the greatest impact of connectivity on IFE may be to change the passenger mindset. We’ll start to bring our earthbound expectations, and behaviours, on board. It’s a shift from “I’m happy to watch what you give me”, to “Why can’t I watch what I want?”. To maintain IFE as a brand differentiator, airlines will need to meet that demand for choice and flexibility by creating richer, more personal and potentially more interactive experiences. Just like on the ground.
“What we have right now,” says Inmarsat Aviation’s Director of Aviation Content and Applications, Adrian McAloon, “is a walled garden of content, where airlines are selecting what they believe passengers should want to see and view and experience. With connectivity those walls come down… but in the connected airline environment there’s a real opportunity to create new entertainment experiences.”
Of course, whether or not carriers choose to monetise these experiences will depend very much on the airline. For many, enhanced entertainment will simply be an extension of the free-to-view brand proposition that’s available today. That’s how air travellers have been conditioned to think. But for others who already break out elements of the travel experience with a la carte pricing, revenue opportunities will emerge.
What’s interesting is that few of these potential applications are genuinely new. They’ve been talked about by industry insiders for years, and there are examples in practice. But the absence of reliable, consistent connectivity has been a restraint. The arrival of next generation high-speed Wi-Fi, creating the impetus for change, even if it’s as much about lifting the lid as true innovation.
Live and direct
The most obvious example of connected entertainment is live TV, and in particular live sport and events. There’s already a huge appetite for this kind of shared experience – football, soccer, cricket – as there was for this year’s Superbowl, and as there will be for next year’s World Cup. Several US carriers provide TV for free, but passengers are also used to a pay-per-view model. It’s how cable segments its product so it’s a short step to a similar premium offering inflight. “One option,” suggests McAloon, “is to group content and connectivity together – the live feed, commentary, interviews – to create a sports package. It’s a way we can create entertainment experiences we haven’t seen yet.”
More traditional content also creates ancillary opportunities. Here, connectivity is more facilitator than delivery channel. With more passengers BYOD-ing their connected devices than ever, W-IFE is an appropriate solution, particularly on shorter routes that haven’t offered entertainment in the past. Airlines like WestJet and Alaskan offer successful paid and premium services for W-IFE movies and TV.
Of course, static W-IFE content is primarily delivered via an on board server. But it could be accessed through the same portal as IFC. So there’s an opportunity to bundle – the thinking being that if you’re prepared to reach for your wallet for Wi-Fi, you may also be prepared to pay a little more for IFE. As connectivity becomes more commonplace in Europe, this W-IFEC model is catching on, adopted recently by Lufthansa Group’s Austrian and Eurowings brands. And amidst concerns about the possible impact of laptop and tablet bans, the W-IFEC bundle could even spark an ancillary tablet rental trend.
A much less well defined opportunity is the interaction between connectivity and content partnerships. There are a lot of different models in play. Wi-Fi opens the door to new providers, the likes of Netflix, Amazon and Spotify, that rely, at least in part, on the broadband connection.
The ultimate captive audience
Partnership entertainment-on-demand can subsidise the content costs that airlines traditionally face. But there are also ways that third party AVoD can create incremental revenue. Beyond pay to play, there are branding and sponsorship arrangements that recognise the unique value of an airline passenger; a captive audience with time on their hands and a high predisposition to spend. Airlines could share in the advertising revenues earned by the partner as a platform, by providing exclusive access to their passengers. Alternatively, they could share in the value of additional subscriptions promoted and/or generated inflight. As the new models replace the old, there are probably as many ways to make money as there are deals to be done.
Which leads to the inevitable question, will IFC ultimately oust IFE?
The answer, at least on long-haul, is almost certainly no. “I don’t think anyone would suggest IFC can replace IFE on a long-haul flight.” asserts McAloon “It’s an important part of an airline’s cabin experience. There’s still a desire for longer form content through a fixed system… on a long-haul flight, it’s simply more comfortable to put down your BYOD device and look up at a larger screen in front of you.” It’s complement not conflict. What’s important is how the two services synchronise as part of an integrated IFEC offering, that may include both the passenger’s and the airline’s screens.
But in short haul, where the IFE proposition is less mature, IFC offers a significant distraction, without the content costs associated with W-IFE. The jury is still out. Some carriers may decide that the internet is a big enough entertainment store without added extras so they don’t need IFE. For others, streaming W-IFE content will create novelty, differentiation, and the direct and indirect revenue that innovation implies.
IFEC strategies will no doubt vary, not only among airlines, but also within each carrier’s different cabin classes. Larger HDTV screens in the front of the plane, more tablet racks in the back? What’s certain is that after lots of talk but precious little delivery, the advent of true high quality connectivity is finally likely to kick start tangible change.