Can Netflix get in on the IFE game?

Want virtually unlimited streaming media content when you fly? Netflix thinks it has the answer to that challenge. The company’s chief product officer, Neil Hunt, has been quoted once again as saying that it might just be easier to skip the challenge of streaming content from its servers on the ground to passengers on planes via connectivity; it could put a full copy of the Netflix library on board instead.

“We are seeing the next-generation of Wi-Fi in planes, so that’s a direction,” he told Digital Spy. “The other direction is that we can fit the whole of Netflix into a box that’s this size [about 1 square foot], that can fit on a plane, so why not pursue that?”

Of course, just because a box can be sized to hold the full Netflix library does not mean that it will be flying any time soon. For starters, just being able to get a box with a bunch of hard drives in it doesn’t get that same box onto an aircraft. It doesn’t get that system integrated into the IFE or onboard connectivity systems. And it doesn’t immediately meet the FAA (or other authorities’) certification requirements. But technical problems can be overcome. And certifying server and WAP hardware is not insurmountable, as wireless IFE providers have shown. Third party platforms can be leveraged to ease the certification process. There’s also a decent chance that Netflix can convince an airline to add the weight and give up the space necessary to carry the kit. But there are also cost implications at play.

Specifically, how will the individual titles be licensed for sharing in the onboard environment? Does the cost to Netflix vary based on where the hardware is stored versus who is accessing it? If the content remains pay-walled on board does it remain under the current contract deals which Netflix and its providers have already agreed to? Typically Hollywood has taken a different approach when it comes to licensing public performance versus personal consumption. Inflight licensing has always been something special as well.

Industry experts have suggested that storing the content on the aircraft changes the licensing requirements, increasing costs. And IFE industry veteran Michael Childers suggested: “If we are talking about … cached content [on board] that is something that does require licensed rights. The same reason why a VOD Internet-based service provider can’t put a fileserver in a movie theater and say ‘I am not going to share my revenue with the studios anymore, I am simply going to stream Netflix and you bring your iPad and we’ll be fine’. It’s the same reason you cannot do the same thing on a college campus because those are theatrical rights and non-theatrical rights and those are preserved.”

The other cost question at play is whether it is even worth it to Netflix to put its content on board versus paying (or getting customers to pay) for the transmission bandwidth. JetBlue has struck deals with Amazon and MLB.TV to pay for the bandwidth costs of pushing their content (and others’) on to its aircraft over the ViaSat/Thales connectivity platform. That solution, dubbed “Bring Your Own (Content) Rights” by ViaSat executives, takes advantage of ubiquitous connectivity and ever dropping bandwidth costs to deliver the streaming content to users while not worrying about onboard content storage or the associated licensing.

BYOR also saves on the costs for content loads (either bandwidth of some sort or a technician visiting the aircraft). It keeps maintenance costs down. And it is a proven concept rather than a theoretical. Hunt admits that his “Netflix in a box” idea is at least a couple years off, if it every really takes flight. And with the current and projected bandwidth cost and availability trends there is a very real chance it remains grounded, or emerges in another form, perhaps in partnership with current IFE stakeholders.

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