Monetizing content and generating ancillary revenue for airlines across every touch point of the passenger experience (#PaxEx) is “the most interesting development” ahead of Spafax, the number two content service provider (CSP) in the world, the firm’s head honcho tells RGN.
A variety of methods are currently being employed by airlines to drive ancillary revenue from inflight entertainment and connectivity (IFEC) on board aircraft, including charging passengers outright. But they’re also turning to advertisers and sponsors to subsidize or cover the cost of offering IFEC. JetBlue’s free inflight Wi-Fi, for example, is sponsored by TIME, Verizon and the Wall Street Journal. More broadly, British Airways is among a raft of carriers offering a range of different advertising options, including online, boarding passes, at the airport, and in-flight to generate revenue at every stage of the journey.
“We create content – not so much on the television side, but obviously we do a lot of the kind of content you create in a B2B sense. We do a lot of inflight magazines, electronic products, digital products, social media and we’re increasingly looking at creating PR events that can spin off as content plays for airline clients and their customer eco system,” says Niall McBain, CEO of Spafax, a division of UK-based marketing and communications behemoth WPP.
“But we’re not just a content business; we’re a media business, so there are new ways of looking at ancillary revenue and how we build models in that direction, and then the technical delivery for all of it. I’ve been in this business for a long time but it has never been more exciting than it is now. Some of the drivers on the technology side are creating a lot of opportunities for the future. With that, we have to be flexible with regard new kinds of content and deals, and new types of ways of implementing it.”
That includes attracting travelers’ eyeballs on the ground and in the air, and embracing a “content on the go” mentality. Monetizing this content and generating fresh ancillary revenue streams can be complex “because you’re still dealing with a highly fragmented environment”, notes McBain, but Spafax is making gains “and you would expect us to be working quite hard on that, and we are.”
He adds, “We are part of an organization that buys a third of the media that’s bought on the planet, so we have a real interest in generating the revenue potential for our clients, but we’re also part of a marketing organization, so we understand the sensitivity of a brand’s relationship with its customer. So it’s about developing revenue and being mindful of the brand presence and the customer experience. I think we will be increasingly looking at models for media investment, for data investment and connecting our content solutions with that.”
Though Spafax faces competition in the onboard environment from a variety of smaller, independent CSPs, the company’s main rival is industry heavyweight Global Eagle Entertainment. But McBain says the two firms are quite different, “have a very different DNA”, and indeed work together in certain instances.
“At the end of the day, it all depends what a client is looking for. A traditional CSP is only talking movies and TV – and that’s a very sticky and premium part of content – but it’s only part of content nowadays. As a result, we are focused on developing our digital services and content services across the board. To this end, we have gained significant new technical, media and audio contracts from both Global Eagle and others this year. If I had to, I would estimate us now at 40% of the CSP market. My issue with market share, however, is that it does not take into account the depth and quality of the client-CSP relationship,” says the Spafax CEO.
“Then we have the other side of the perspective – looking at bundled solutions, and revenue driven solutions where we are also equally looking at competing with the likes of Global Eagle. In this market, you compete and you also fraternize with competitors who work with different organizations in different situations. We’re Global Eagle’s biggest client [on certain Global Eagle content]. Spafax is about delivering the best solutions to clients and managing it.”
Spafax recently launched what it calls a “best-in-class” facility that aims to become the go-to HD post-production lab for the digital age. Located at the iconic Sunset Gower Studios Lot, Spafax’s new ‘The Hub’ lab aims to ensure “flawless content delivery to any platform, including IFE, wireless, streaming, mobile, and social media”. Spafax senior VP, USA Al St. Germain discussed The Hub as a guest on this week’s Airplane Geeks Podcast.
It’s clear that The Hub is very much about serving brands and passengers end-to-end. “When people look at changes in industry – particularly with new technology – they’re focused on how they can disrupt the supply chain and do things differently, but they often forget the broadening nature of the new technology. The fact that we’re looking at the interplay of content, smart technology and connectivity, and how that plays out is a much wider question than how to do streaming of movies and TV on a wireless connected aircraft. There are so many more possibilities of content in the journey experience,” says McBain.
The inflight portion of that experience is undergoing some notable change, as inflight connectivity and wireless IFE gains a greater footprint in the world fleet. But McBain isn’t convinced that most long-haul airlines will adopt a purely wireless cabin. “There will be some fleets where it makes sense not to have screens because you have devices, but on a lot of those long-haul flights, you’re competing with the experience of the big screen in high definition, so it doesn’t make sense. People will go to the best screen experience in the environment they’re in.
“People’s devices open up so many more possibilities to provide content and entertainment and communication to passengers, so wireless revolutionizes short-haul travel and will probably more than double the current distribution of the screen’s IFE. For us, mobile creates ancillary opportunities, and it brings more than it eats, if you know what I mean. I think digital creates opportunities for all sorts of types of content, and I think it’s fun. You can have fun without spending fortunes.”