ANAHEIM: The future of inflight entertainment and connectivity (IFEC) can best be summed up in two simple words: “on demand”, Par Capital Management vice president Edward Shapiro predicted during his keynote speech for the APEX Expo educational day. And though most airlines are focused on reducing their costs these days, Shapiro said there is a very real and growing appreciation for what the IFE industry is able to deliver right now. Or at least there should be.
“Everyone in this room knows all too well [that] everything you do on a plane costs a lot more and takes a lot longer to deploy than it does on the ground,” said Shapiro, who chairs the board at IFEC company Global Eagle Entertainment. But, the fact remains that the IFEC industry is “now in the early stages of enabling new sources of high margin ancillary revenue and thereby improving the profitability of our customers”.
Key in maximizing that potential, said Shapiro, will be the industry’s embrace of next generation “cord cutter and cord never” passengers – who don’t see the value in traditional cable subscriptions – and the third party Over-The-Top (OTT) content providers (like Netflix, Hulu and Amazon) who cater to them.
“No longer is it acceptable for that generation, and maybe even for our generation, to have one program choice and to expect everyone in the room to want to watch it at the same time,” said Shapiro, adding that the next wave of passengers expect “all content to be available wherever and whenever they want it”.
Shapiro went on to say that he sees the proliferation of OTT content delivery providers as an enormous untapped opportunity to expand the industry’s business by connecting passengers with third parties, who, to date, have had no reason to be involved with either the IFE or airline industries at all. And when you look at the variables involved, Shapiro said, it’s pretty much a no brainer.
“Together with our airline customers we have a very large and valuable audience, which is targeted, affluent and captive … [and] in this fragmented world we live in with 500 channels, the Internet, second, third, and even fourth screens, it is increasingly difficult for advertisers to deliver their message to consumers. But as wireless in-seat video and connectivity platforms proliferate, we as an industry are in a great position to help our customers both enhance and differentiate their products, reduce their costs, and generate incremental revenue,” Shapiro explained.
Shapiro said that by doing this, IFEC providers will become value-added partners to their airline customers’ customers, rather than simply vendors. “[And] if I’m right, our role will expand to include audience aggregation and the airline passenger experience will be enhanced by these new participants who will want to access our unique audience,” said Shapiro, who only half-joked that: “Where else on the planet can you gather a few hundred strangers, put them in a relatively small room for [several] hours at a time, charge them for privilege of doing that and then control or at least influence what they do and see?”
“We are doing this today,” said Shapiro. “And we are doing it with almost 10 million passengers each and every day. How can anyone not be excited about being part of an industry that’s able to do that?”