The Rapid Ascent of In-Flight Entertainment

by Marisa Garcia + Skift Team - May 2014

Skift Research Take


In-flight entertainment is a hotly contested sector of the cabin interiors and inflight services sectors. Over the past twenty years it has evolved into from a one-size-fits-all entertainment platform to a highly customized and personalized multimedia entertainment experience, and it’s only just getting started. The evolution of the theatre in the skies is a trend to watch closely in years to come.

Report Overview

Today, in-flight entertainment (IFE) is one of the largest growing sectors of the aircraft interiors market. The value of the IFE market will reach $2 billion by 2015, and the expenditure on content to supply that IFE is in the range between $450 and 500 million, according to Aircraft Interiors International Magazine. The premiere of new IFE technologies garnered a great deal of attention at the Aircraft Interiors Expo in Hamburg this April from airlines and industry watchers alike, rivaled only by the excitement generated by new in flight connectivity options; which is, in fact, is a related tech development.

Larger, HD-ready smart IFE screens, powered by new “invisible” wiring systems, and eliminating under-seat control boxes, were also a prime feature of the new A350XWB aircraft which Airbus debuted on the day before the Aircraft Interiors Expo opened. The new announcements of ever more lavish cabin programs by top airlines are generally accompanied by the introduction of enhanced IFE offerings.

In this report, we’ll look at how IFE has evolved in recent years to such a prominent element of the in-flight experience, why IFE is such an important factor to the airlines in product differentiation, what new innovations are in store for this technology, where IFE lags behind modern technology and when it might catch up. We provide some important highlights and feature key players and airline case studies here, in order to reflect the predominant trends in today’s market.

Executive Summary

Today, in-flight entertainment (IFE) is one of the largest growing sectors of the aircraft interiors market. The value of the IFE market will reach $2 billion by 2015, and the expenditure on content to supply that IFE is in the range between $450 and 500 million, according to Aircraft Interiors International Magazine. The premiere of new IFE technologies garnered a great deal of attention at the Aircraft Interiors Expo in Hamburg this April from airlines and industry watchers alike, rivaled only by the excitement generated by new in flight connectivity options; which is, in fact, is a related tech development.

Larger, HD-ready smart IFE screens, powered by new “invisible” wiring systems, and eliminating under-seat control boxes, were also a prime feature of the new A350XWB aircraft which Airbus debuted on the day before the Aircraft Interiors Expo opened. The new announcements of ever more lavish cabin programs by top airlines are generally accompanied by the introduction of enhanced IFE offerings.

In this report, we’ll look at how IFE has evolved in recent years to such a prominent element of the in-flight experience, why IFE is such an important factor to the airlines in product differentiation, what new innovations are in store for this technology, where IFE lags behind modern technology and when it might catch up. We provide some important highlights and feature key players and airline case studies here, in order to reflect the predominant trends in today’s market.

Introduction

Source: Flickr/ DavidBrownThe

Source: Flickr/ DavidBrownThe

In-flight Entertainment (IFE) is popular with airlines because it provides strong opportunities for product differentiation and enhancement of in-flight services. It is also an essential element of smooth flight operations by helping keep order in the cabin and pacifying passengers during long flights.

These two factors require airlines to select IFE products which are both engaging and reliable. System failures can result in greater customer dissatisfaction than no system. Dissatisfied passengers can quickly turn into unruly passengers.

IFE selection is a big decision for airlines. It is a significant investment not only in the IFE equipment itself, but also in the costs of fitting the IFE onto the aircraft. Airlines, therefore, are weary of choosing a system which will quickly become obsolete.

Obsolescence, here, is in the context of aviation parts. Whereas everyday technology may be obsolete within a year of its debut, no aircraft component will be obsolete so quickly. A more reasonable time frame is three to five years of product service, as a minimum.

At the same time, IFE is such an integral part of cabin product differentiation, and such a hotly contested market, that there is a push to innovate this equipment faster than any other cabin component.

IFE helps airlines prove they are relevant to today’s tech-savvy passenger. Though the equipment available may not keep pace with other technology markets, both airlines and manufacturers are under pressure to match the passenger’s home technology environment.

This generates a dichotomy in aviation between feasibility, and modernity. That dichotomy is present throughout the cabin, but it is most noticeable with IFE.

In order to avoid acquiring systems which are outdated by the time they go into service (1-3 years after product selection), airlines tend to choose “safe bets” from the two largest suppliers: Panasonic and Thales. Other suppliers have earned their market share by solving IFE problems for airlines which the large players fail to address.

There is a lot of talk in the industry about whether new connectivity options and live streaming of television to personal electronic devices will make even advanced embedded IFE obsolete. The limitations of Bring Your Own Device (BOYD) systems, make this unlikely.

While PED streamed content is a good solution for aircraft not already outfitted with embedded IFE, or a nice complement to embedded IFE for customers who multi-screen, some passengers on board have no equipment. Even those who do may prefer to be entertained on a larger HD Screen, or to enjoy the early release content which some airlines feature.

Long-haul flights are most likely to require embedded IFE for years to come, while mid-haul, and especially short haul flights, may be adaptable to content available only on PED devices, or no IFE offering.

We’ll look at key examples of IFE equipment selection: cutting edge tech for the premium airlines; the middle of the road product for “frugal carriers”; and the Bring Your Own Device (BYOD) options. We’ll also discuss the key reasons why some carriers have avoided IFE on many or all of their flights. Those decisions are not entirely cost related and reveal some of the weaknesses of this technology, even today.

We’ll also look at recent developments in IFE equipment, and how they might evolve.

We’ll delve into the mysteries and promises of improved content offerings, since even the most advanced IFE becomes ineffective with stale content.

Last, we’ll take a peek at some of the visions of where this technology might headed in future decades.

The Onboard Theatre

Source: Delta

Source: Delta

For some airlines, merely providing in-flight entertainment for the purposes of distracting passengers during the flight is not enough. These airlines have made the entertainment product an integral part of their marketing strategy, initiating a race to provide wider screens, better sound systems and extended variety of content. This competition takes place predominantly in their Premium class products, but often filters through to all classes of service.

The change to making IFE a priority throughout the aircraft, rather than exclusively as a premium product, has been ongoing over recent years with leading carriers. Where in the past, airlines attempted to differentiate their premium product by limiting certain exclusive early-release films for their Business Class and First Class passengers, today many have decided that content is an important enough benefit to make it universal. In some ways, it is the airline’s way of souping up what is otherwise an uncomfortable economy product.

These airlines which have chosen to become theaters at 30,000 ft, generally select an IFE system capable of reliably supporting a large selection of content on demand throughout the cabin according to the individual passenger’s desires. This requires a strong computing system to back the product, in order to avoid the main controller from being overtaxed, leading to slow loading and service failures.
Over recent years, the winner in this premium IFE race has been Panasonic, though Thales is positioning itself to take a greater share of this market in coming years.

Etihad

When they recently debuted their A380 apartments, Etihad made sure to equip those apartments with two large flat screen TVs, a 32-inch LCD in the living room section of the cabin and a 27-inch LCD in the bedroom. They offer broadband with telephony and data capability and as well as live television content. They selected a Panasonic platform, the eX3 entertainment system, which is controlled by a video touch screen and handset.

At the same time, they announced that the eX3 entertainment system will feature on both their new A380 aircraft and their new Dreamliner B787s. It will include 750 hours of on-demand entertainment, and games.

Though the size of the screens naturally vary from First to Economy, they will all operate on the Panasonic eX3 and carry the same content.

In their existing fleet, the airline offers its E-BOX system, on a mix of Panasonic eX2 and Thales TopSeries i5000. Passengers can also play their own content on these units through ethernet and audio sockets. Some flights offer a connectivity option which includes data and telephony. Reviews of these systems have been mixed, with some passengers complaining that the interface is not intuitive and that the response of the system to demand is slow, with a long wait time between pressing a selection and the content starting up. That is a typical complaint for a server-centric Audio Video on Demand (AVOD) system delivering to dummy terminals.

The eX3, by comparison, was designed to be both server centric and seat centric, (distributing the data load) and has a Graphical User Interface (GUI) intended to simulate that of smartphones and tablet devices. The manufacturer claims that their solid-state storage capabilities maximize the quantity of media the system supports and ensures system reliability.

Singapore Airlines

Source: Singapore Airlines

Source: Singapore Airlines

Singapore Airlines places a high priority on every element of their cabin, down to the tiniest detail. This is as true of their IFE as any other element which constitutes a customer touch point. While Singapore Airlines is already characterized by a strong KrisWorld IFE product on board their existing fleet, aboard their their B777-300ER NextGen aircraft, they have also introduced new seats with large LCD screens (24-inch in first and 18-inch in Business) for their KrisWorld IFE which can be controlled by touch-screen handset, and 11.1-inch touch screen monitors with touch-screen handsets in Economy Class.

Like Etihad, which we discuss above, and American Airlines which we’ll discuss next, Singapore Airlines has selected Panasonic hardware for their systems.

The airline’s focus on providing a consistent quality product translates to a consistently good IFE experience as well. As the airline has shared with us, it views IFE as a key component to passenger comfort because it generates a “sense of control” and also “connects them to their life on the ground.” These are two important factors which the airline feels helps to eliminate passenger’s anxiety over flying.

Singapore is a very unique case because it only flies long-haul flights, and very long flights. Therefore, the IFE system they select cannot be prone to service issues, and must accomplish their aim of ensuring customers feel both connected and distracted.
This is not accomplished by IFE hardware alone. The quality of content is essential to the success of their product.

The content on many airlines is characteristic of the cultural preferences of their predominant customer mix, which can be mono-cultural. While all airlines provide a certain amount of content targeted at a wider international audience, it may not be their first priority.

Because Singapore itself is a multi-cultural melting pot, Singapore Airlines starts with a global mentality, and selects their content mix specifically to appeal to the broad range of cultures of their passengers. Their offerings include popular Hollywood Blockbusters, but they also include hits from China, Europe and other parts of the world which their customers call home.

This presents a challenge in terms of product selection and SIA resolves this challenge by working with various content distributors, rather than single-sourcing, as well as working with the studios directly.

American Airlines

Like other premium airlines, American Airlines has chosen a Panasonic hardware platform. They have also focused on ensuring that the equipment on board is state-of-the-art in the front and in the back. American has also taken advantage of their position as the largest airline in the US and, after the merger with US Airways, the largest airline in the world, to tackle the content challenge.

American’s Alice Liu, Managing Director, Onboard Products, likes to say that passengers can travel fifteen times around the world without consuming the same content twice on their IFE. While most airlines rely on a content distributor to negotiate licences, acquire content and format it, American picks up the phone and calls the studios directly to specify what early-release films they want.

This is powerful content-clout in an industry which is usually at a disadvantage. American does use a distributor, but they are tasked with ensuring that the formatting of the content acquired is formatted for their onboard services.

As a founding member of the Oneworld alliance, American Airlines often shares opportunities for group-acquisition on a number of aircraft components, negotiating contracts with suppliers based on the promise of potential sales to member airlines. Members have the opportunity to participated in a joint-purchasing agreement or go it alone, but often they do band together ensuring both a cumulative savings and uniformity of the onboard product for passengers flying their network.

This purchasing collaboration is not unique to American Airlines and the Oneworld alliance, but due to the alliance’s size it is extremely effective.

Home Entertainment

Source: Virgin America

Source: Virgin America

Virgin Red

Virgin America has been the most innovative and experimental airline with their IFE system, consisting of a High-Definition Panasonic embedded seat back screen, powered by CoKinetic software. The Virgin America Audio Video On Demand (AVOD) service is designed to entertain and engage passengers in a variety of ways. In addition to movies and live-satellite television via Dish Network, Virgin America provides a wide assortment of games, an interactive Google Map feature, and shopping. Virgin America was also the first to innovate food service on demand through the IFE menu, even allowing passengers to order food and beverages delivered to other passengers on board, pitched as social aspect of the entertainment platform, which includes allowing passengers to chat from seat to seat.

Virgin has also been clever about figuring out how to monetize this technology. There’s a lot of talk about the potential to incorporate sponsored content and advertising into IFE, to help offset the costs of the equipment and also to provide a revenue source for the airline, but this business strategy is still in its infancy. Not for Virgin Atlantic, though. They have an active sales department dedicated to promoting their IFE space as an advertising platform for major brands.

Their advertising platform consists of a combination of traditional ads and custom content which serves as an advertising medium. Figures on their success are not public, but what is important is that the Virgin America model is followed closely by the industry, and raved about by Airline Passenger Experience Association (APEX), who have their roots in IFE services and content, though over recent years they have diversified into a wider range of cabin products which affect the passenger experience. Even now, the Avion Awards for IFE given out by APEX every year are the most prestigious prize to be won in the industry for this service.

Virgin America has been a consistent winner of numerous APEX awards since 2009, and the current President of this volunteer association composed of industry professionals is Alfy Veretto Manager of IFE for Virgin America.

The airline has clout in the IFE community, and is also pressured by its own success to continue maximizing the potential of the technology. Though they may not fit in the lavish home theatre category, they are as much at the forefront of trends in IFE as any of the much larger airlines. For this reason, the bulk of the industry watches Virgin America closely and uses them as a gauge of what trends are likely to succeed.

Norwegian Air Shuttle Hybrid Service

Source: Norwegian Air Shuttle

Source: Norwegian Air Shuttle

A good example of Virgin America inspiring other carriers to experiment with their IFE platforms is the disruptive Scandinavian low-cost carrier Norwegian Air Shuttle.

For their long-haul routes Norwegian has adopted an interactive IFE offering, with a service offering similar to that of Virgin RED, developed by Panasonic for Norwegian’s 787 Dreamliners, operating on an Android platform; which makes it a familiar UX for passengers. Norwegian provides an assortment of music, films, television, a 3-D map with “Geo-tainment,” and games. But they have also added food service “Snack Bar” which can be ordered on-demand and paid for by swiping a credit card on the IFE unit. According to Norwegian, this is a popular service with their passengers.

On the their short-haul aircraft equipped with free Wi-Fi, Norwegian has opted to supply their passengers hundreds of hours of on-demand movies and TV-series available for rent which can be viewed directly on the passengers’ Personal Electronic Device (PED). They’ve also extended the flight-tracking map feature of their IFE to this service. Their content and connectivity are powered by Global Eagle Entertainment Services/Row44, which also supplies their Wi-Fi Ku-band service.

By combining the two IFE models, embedded and Wi-Fi streaming, Norwegian ensures that they provide entertainment on all flights, at least to passengers equipped with their own PEDs on short-haul flights. It should be noted that Norwegian didn’t have much of a choice when it came to their long-haul flights. Boeing requires that seats on the Dreamliner are embedded with IFE, at least for now. There’s no reason to think they would have opted for non-embedded IFE on their long-haul flights, however, since they view this service as an integral part of their customer service platform and a key differentiator which has won them a number of awards.

JetBlue’s IFE Profit Center

Source: Thales

Source: Thales

What many don’t know about the big JetBlue sale of its LiveTV to Thales in March of this year, which earned the airline $400M USD, is that it’s actually been a complex IFE hot potato tossing contest from the beginning, aimed at ensuring that the technology would not fail before it had a chance to take off. LiveTV came about as part of a series of acquisitions and sales of AirVision technology, which debuted in the 80s.

BE Aerospace, a leading aircraft seating manufacturer, first acquired the technology from Phillips seeing the future potential of it, then effectively rebranded and deployed in a joint with Harris Corporation in 1998. Later, BE Aerospace sold its shares in LiveTV to Thales. In 2002, JetBlue bought out LiveTV, a move which served not only to diversify JetBlue’s holdings, but also may have served to keep the service going through hard times in the industry following the 9/11 attacks. It was a visionary move; as the firm (through all its evolutions) has always been one step ahead with the next great development.

When the sale was announced in 2002, Glenn Latta, executive vice president of LiveTV had this to say:

“After ‘going steady’ for the last few years, the marriage with JetBlue is a very exciting development. LiveTV and JetBlue share a vision of innovation. Together, we look forward to creating new ways to enhance the customer travel experience and make flying more enjoyable.”

Those words proved true.

When JetBlue sold their shares to Thales this March, it effectively recover the “carrying costs” of this technology through those difficult times. It was smart timing for handover, just when the new technological innovations from Thales are likely to revolutionize the industry again.

How revolutionary could it get? Very.

For one, the hardware and interface advancements Thales is making with their products and the associated services may ultimately put Virgin America’s own innovative product offerings to shame. There has also been a push for Global LiveTV services which suffered from start-stops due to issues of adequate bandwidth and satellite coverage, but which LiveTV has now effectively deployed.

Then there’s the connectivity conundrum. JetBlue’s Fly-Fi service is powered by ViaSat which is also a LiveTV connectivity partner. LiveTV is in talks with Zodiac about powering their IFE systems with connectivity. This year, at the Aircraft Interiors Expo in Hamburg, Thales announced that it has also become an official reseller of Inmarsat’s Global Xpress (GX) connectivity services.

At first, this may appear to put Thales at odds with JetBlue, but one must remember the connections.

In effect, if all goes as planned, Thales can become a bridge between ViaSat and Inmarsat. Gaining from service flexibility and coverage from both, and earning revenue from resale of these services to their direct competitors. One can only assume that part of that revenue will be applied to further developments in the IFE hardware technology when Thales capitalizes on the revenue from all that connectivity.

Did we mention that Thales makes communications satellites?

For its part, JetBlue has benefited greatly from the positive response from their customers to LiveTV, during the lean years when such services were inconceivable to most carriers. It will also benefit from Fly-Fi, even more than it has already.

Source: JetBlue

Source: JetBlue

JetBlue saved IFE, and IFE saved JetBlue.

LiveTV helped cement the JetBlue brand as something special and something different in the air. Fly-Fi seals the deal with customers. JetBlue will provide these services in years to come, without carrying the operating costs. To their passengers, all this hot potato toss is invisible.

The passenger experience thus far has been unaffected, and, if anything stands to improve considerably. When Thales takes its developments to the next level, JetBlue and other key airline customers, like United, and Virgin Australia, have a lot to gain.

Bring Your Own Device

Not everybody can stomach hardware. In fact, a great number of airlines could not fit another ounce onboard. Fitting embedded systems onto aircraft involves not only a complete overhaul of the seating product, but also a recertification of the aircraft to reflect the extra weight of carriage. Then there are the fuel costs associated with flying heavier aircraft. Overall, there is no visible pay off.

For short-haul and medium haul flights, on many carriers, this engineering and economic realities have resulted in no IFE services offered; unless you count the in-flight magazine, which many do. That is all in the past.

With the introduction of numerous Bring Your Own Device (BYOD) content solutions, certain airlines have managed to keep customers entertained without significant damage to their aircraft certification or to their bottom line.

Welcome to the new wireless world onboard.

Southwest Airlines

Southwest Airlines offers DirecTV and content supplied by Global Eagle Entertainment powered by Row 44’s Ku-band satellite-supported network. Passengers are able to select between live television content, as well as films on demand, while staying connected to the ground via email and social media. This service has been popular, but Southwest is an especially important development to watch because of their accommodation of special needs.

Despite the US Department of Transportation (DOT) first issuing a proposed rule making document (NPRM) requiring airlines to include closed captioning (CC) on their IFE offerings back in 2006, the industry still lags behind. In fact APEX (then still known as the World Airline Entertainment Association) persuaded regulators to table this requirement in 2008, arguing that closed captioning would not be economically feasible to airlines due to the considerable amount of the content which would need to be reformatted and dubbed.

AT&T Takes Flight?

During the development of this report AT&T announced it would buy DirecTV for $48.5 billion.
This means that one of the world’s largest telecommunications companies may soon be a player in the
IFE arena, not just by providing Wi-Fi connectivity onboard but also content. We await further news with great anticipation.

The matter was not closed. In 2010 the 21st Century Video Communications and Accessibility Act, aimed at all forms of entertainment was signed into law. Though it was not exclusively drafted to deal with IFE, it still had direct impact on IFE, forcing the DOT to revive their previous efforts to force the industry to provide this essential service. In March of 2013, Senator Tom Harkin introduced the Air Carrier Access Amendments Act, S. 556, which required both closed captioning and image narration, in order to accommodate the needs of hearing-impaired passengers as well as those with visual impairments. The DOT has since advised APEX directly that it intends to publish a new Notice of Proposed Rule making on this issue this June 26, 2014. And APEX is actively working to influence the drafting of this rule, providing comments to the proposal and setting up a Closed Caption Working Group (CCWG) comprised of leading industry players and experts in this area of the aviation services industry.

This renewed call poses a special challenge to international carriers who may aim to fly in the US, since they would conceivably also be required to comply. While US Carriers may ultimately find a solution to the close-captioning and descriptive narration challenge, it is a far more difficult endeavor for carriers whose nations have no established laws requiring any such accommodation.

Enter Southwest. Anticipating which way the rule will come down this summer, or perhaps simply interested in drawing a line in the sand and making their corporate values known on this issue, Southwest has announced that it will offer closed captioning on their wireless IFE service. This announcement was well received by the Hearing Loss Association of America.

United Airlines already introduced closed captioning into their LiveTV IFE content on their Continental fleet in 2011, a side-benefit of the acquisition of that carrier. But this is not a fleet-wide service.

Southwest, will be the first to introduce a fleet-wide service via their wireless on-demand television later this year. Introducing this service via a DirecTV supplied product is relatively straight-forward, compared to being required to dub purchased content in various formats from various sources (the challenge for the mainstream carriers who offer IFE on traditional embedded systems). Arguments on the logistics of implementation appear to be losing favor in the forum of public opinion, and Southwest Airlines’ coming out, as the little airline that could, might be the tipping point.

Lufthansa Board Connect

Source: Lufthansa

Source: Lufthansa

Lufthansa Systems, the separate IT branch of the Lufthansa German Airlines’ conglomerate, saw the writing on the wall, practically before anyone laid the first brick. At least, from the airline side of things. They not only understood the inherent value to airlines of easily providing IFE via wireless services direct to both in-seat and passenger’s devices, but they also developed a cost-effective and low-maintenance system for doing so, simplifying content management, and providing a platform to monetize the service.

Interestingly, while many of the IFE platforms now being introduced operate on an Android OS, BoardConnect is a Microsoft based service. Depending on growth in the functionality of Microsoft’s operating system, this could prove to be an Achilles heel for Board Connect.

Key to this wireless IFE service is system stability, speed of transmission and ease of use. The Board Connect system offers various maintenance solutions to airlines to ensure the system health and and alert to potential repair needs. It depends on a central server transmitting via a 3G modem through multiple access points, according to the capacity of the aircraft, which deliver content to the devices on board.

Lufthansa has had some success with this product. They offer both entertainment content and customized content like inflight magazines, destination guides, as well as revenue enhancing shopping options and applications for flight crew to help them with cabin services; all of which makes this an attractive offering to airlines looking for a simplified solution.
Lufthansa is realistic about what types of flights are appropriate for a strictly wireless IFE system. They market it for short-haul and mid-haul flights.

It must be said that some suppliers of wireless IFE, as you’ll read later, call into question whether these systems can supply an aircraft-full of passengers all trying to access content at once. Lufthansa Board Connect claim they can, and as they supply equipment which feeds seat-back displays as well as PEDs, it was developed to do precisely that.

Low-Cost Carriers Fall Short

In 2004, Michael O’Leary of Ryanair made a radical declaration, telling his investors and the world at large that IFE would be “the next revolution in the low-fares airline industry.” He said this as part of his introduction of their new hand-held digiE-player system for rent onboard, which carried films, cartoons and games. As proven by the number of key low-cost airlines who have benefitted by offering IFE on board, including SWA airlines, on whom Ryanair bases its entire business model, O’Leary was right.

By 2005, O’Leary had to appear before investors and the world again. This time, to announce that he was killing the digiE-player, because the product had no significant takeup by passengers.

The failure of the Ryanair IFE experiment reveals much about what passengers care about, or are indifferent about, when it comes to IFE. It also reveals a number of deficiencies with present IFE offerings which the industry should address.

On airlines who offer embedded IFE as part of their standard service platform, many of these deficiencies exist, but their impact is not perceived because passengers don’t pay for the service.

Ryanair, however, did try to charge. Ryanair had little take-up from its passengers when they had to pay to rent the handheld device preloaded with content. Though the airline was confident that it would be attractive to parents traveling with children, it was not. They had also thought of introducing a gambling platform to attract adults to play (and likely produce more revenue) but that idea died with the system.

It is too easy to make the obvious argument and say that passengers expect this service to be provided free of charge and are not interested in having to pay for it. Consumers pay for things they value. They simply did not value this particular service enough to get their wallets out.

The variety of content, and the lack of content relevant to the passenger mix on certain routes was also blamed, as well as the shortness of the flights. Both of these are likely to have played a greater part in the lack of interest than pricing.

Ryanair did not lose passengers by trying to rent the device, nor did they gain any. The cancellation also did not affect their business. It was an embarrassment to O’Leary, but no harm done.

EasyJet did not learn from O’Leary’s failed program, and attempted to introduce IFE in various forms on select flights between 2009 and 2012, but none of the systems, neither the centrally deployed “drop-down” screen based system, nor the Sony hand-helds, nor Messo devices they tried to rent out, remain. In a support chat room on their website, we can still find a reply regarding the lack of IFE onboard, first written in June of 2013:

“To keep our costs down, we do not offer in-flight entertainment, though you are welcome to take a free copy of “Traveller”, our in-flight magazine, with plenty of information on the destinations we fly to and other interesting articles.”

IFE is expensive. Even when it is transmitted to passenger devices, even when it is pre-loaded content on dedicated devices, it is expensive. Without proven recovery of those costs, there is no motivation for certain airlines to take up these services. We cannot assume that, simply because they require no outfitting of equipment, BYOD options will be a universal success. The success of those systems depends more on content and value-added features than it does on the simplicity of installation and the relatively low costs to equip.

Content licensing represents a major ongoing investment for airlines. Part of the success of services like LiveTV, and DISH Networks on Southwest, is that they simplify the acquisition of content and reduce the overall burden to airlines of acquiring that content.

Further, as they are based on scheduled television programming they remain fresh and relevant, without the airline needing to negotiate new licenses either themselves or through their content reseller. The on-demand film option on these services allows airlines to have films available for rental without having to negotiate any individual licenses. That burden falls on their suppliers.

Even so, none of systems are entirely free to airlines. If passengers do not demonstrate a strong preference, proven by their spending, then some airlines will remain on the sidelines, waiting for the next big revolution to come along. That is certain to be the case with Ryanair and easyJet, for now. The only factor which might change that would be a proven model for monetizing IFE through advertising and branded content. A maximized version of the Virgin RED™ product, delivered wirelessly to passenger’s PEDs, with content managed and constantly refreshed by a third party service, might prove tempting to those on the sidelines. But the revenue from advertising sales, branded content, and sales of meals and duty-free items on board would have to be proven.

Connectivity-based IFE, like LiveTV and DISH Network may be all the rage, but neither Ryanair nor easyJet nor others like them are likely to rush to invest large sums in equipping their aircraft with the antennae which power connectivity-based IFE, unless they absolutely had to, or if the revenue model was so reliable that the temptation to adopt would be irresistible.

For these revenue models to be a proven success, airlines will need to demonstrate that there is an adequate measurable benefit from advertising onboard to potential advertisers.

Even Virgin America, on their 2013 sales sheet, only makes comments on the general demographics and spending power of their passenger mix. They state the potential benefits of location-based advertising, and branded content, but there are no substantiating metrics. For now, this remains one of those things that airlines and some advertisers intuitively feel makes sense, under the “captive audience” theory. As a colleague in the branded content and advertising industry recently commented, there are no “captive audiences.” Consumers are too clever to be swayed one way or another simply because they can’t get away from an advertising platform. In fact, they may react negatively to it.

There is little doubt in the industry that the long-term success and modernization of IFE depends on monetizing the platform. Branded content and location-based advertising, as well as traditional advertising, just make good sense. Everyone agrees they should work. Only, no one can really prove it. For now, it is no more than alchemy: closing the eyes and making a wish to turn monitors into gold. Soon, it will need to become a science.

Newer systems will help an airline accurately gauge the pick-up on various content offerings and even reveal substantial passenger preference data through other IFE interactions, particular to the seat. That will help airlines tailor offerings better and determine what constitutes value to their passengers. It is also key to successful deployment of IFE advertising revenue programs.

Airlines are notoriously bad at understanding how to capitalize on the wealth of data they gather, and there are data companies who base their business on helping airlines figure out just how to do it. If those businesses succeed in their mission, and the data gathered from newer IFE systems can be included in calculations, then IFE may have a brand new future as a reliable revenue source, which would make it far more valuable than it is as a differentiator or a pacifier.

At that point, those who have remained on the sidelines will get into the game.

Stifled Innovation

Source: flydubai

Source: flydubai

The flydubai Reprimand

At this year’s Passenger Experience Conference, held as part of the Aircraft Interiors Expo in Hamburg on the day prior to opening the Expo, Daniel Kerrison, Vice President in-flight Product at flydubai reprimanded the industry stating that it must catch up with modern technology.

In fact, by the time the show doors opened, suppliers demonstrated that they had caught up considerably. There are limitations on any product introduced into the aircraft cabin which significantly impact the technological innovations which can be introduced, and the time it takes to get to market. There are also self-imposed limitations generated by the industry dynamic.

Kerrison was wrong, but Kerrison was right. We’ll look into how he could be both.

The Influence of the Catalogue

The catalogue approach from Airbus and Boeing is one of the greatest thorns on the side of airlines and innovative manufacturers in the aviation industry. To put it mildly. It is often blamed for the lack of innovation and improvements in the cabin environment.

Suppliers struggle to make it onto the catalogue, for which they have to make great financial concessions to the airframe manufacturer and commit to large production runs on tight delivery schedules. These often swallow a big chunk of the manufacturing capacity for the supplier.

To a degree, suppliers which are among the privileged few selected benefit, not only from the guaranteed business but also from the efficiencies of scale. However, it also leads to these suppliers becoming sluggish on change, simply because they don’t want to risk losing that catalogue position. They become complicit with the airframe manufacturers in maintaining the status quo. This changes only when major market forces prompt a shift, and that usually comes from the airline side or from fierce competition from the outsiders.

Those left out of the catalogue face an uphill battle to first sell the airline on the concept of their product, then tackle the objections from the airframe manufacturers once the airline selects them. Most often, those objections are clouded in engineering issues, even though at their heart the objections are commercial. A clever manufacturer, can prepare for the numerous engineering queries which will be directed at them and earn their place onboard. But they must be prepared to do that every time, for each individual contract on each individual aircraft of every individual airline on their books.

It is an expensive and resource-taxing process. Few suppliers are equipped to deal with it.
Therefore, with IFE, as with other aircraft cabin components, the players who compete outside the catalogue are a hearty and innovative bunch.

Lumexis

Take Lumexis as an example. They happen to be the supplier which flydubai selected. In fact, when Kerrison gave his scathing presentation on the lethargy in the industry, he also gave glowing reviews to Lumexis for daring to do something different. And dare they do.

Lumexis is not a newcomer to the IFE game, and is in fact an influential player in the industry, whose Board Members and Executives list reads like a who’s who of both the aviation and entertainment industries. These are folk who know the IFE business inside and out, active players and influencers in the APEX organization, movers and shakers all.

Their principal disadvantage, competing with the likes of Panasonic and Thales, is that they are not Panasonic or Thales. This is a relatively small player, a mission-focused company. It was founded to create and innovate IFE products and services, and that is what it has succeed in doing from the beginning.

Their principal disadvantage comes from being left out of that catalogue, but they’re not bothered. They’ve got Lumexis Fiber-To-The-Screen (FTTS). It’s such a solid design that Thales and Panasonic have liked it enough to borrow from Lumexis when developing their new no-box-under-seat invisible wire systems.

The system is important in that it allows for high-speed, high-capacity, consistently reliable delivery of a wide-range of content to screens on all classes of aircraft. It’s a cost-effective solution with a sturdy design. Its GUI interface is user-friendly and was responsive before responsive was a thing.

Lumexis also have a Wi-Fi delivery product, WiPAX, as a complementary product offering. But it was the only company to acknowledge the current limitations of delivering content to devices on a large scale: there just isn’t enough Wireless Access Point (WAP) capacity available on these systems for them to be a stand-alone solution for a complex-content offering/high passenger-demand situation. These systems work very well for circumstances when the number of passengers trying to access content via WiFi onboard are in the minority.
If hundreds of passengers tried to access a menu of options for content at once, current systems would collapse.

So, if their product is so well designed and their technical capabilities are strong, why wouldn’t Airbus and Boeing put them in the catalogue? Airbus and Boeing look to consolidate suppliers to as few as possible. They pick large companies willing to negotiate contracts which work to their economic advantage. If a supplier also provides other components and can introduce a product on the catalogue as a loss-leader, then charging the airline a higher price for spare parts, maintenance, etc., they can make up for the loss of profit from catalogue sales. Considerably.

This is why flydubai was wrathful. Lumexis’s products, which are low-cost and easy to maintain, are a better buy in the long-term; especially for middle market or low-cost carriers. The catalogue options not only limit the suppliers available, they also pass on costs to airlines in service. Generally, to the airlines who can least afford those costs.

Lumexis competes against the big players effectively by defining a niche market with these small national, regional, and low-cost carriers. It is a very large niche.

Lumexis also brings something to the table their competitors do not, which gives makes them even more valuable to these airlines.They fully manage content. They can create special applications, negotiate contracts for licensing of entertainment, format content to fit the airline’s need and provide a number of other key value-added services, which allow smaller airlines to compete with the large flagship carriers.

They are truly a solutions provider, more than a hardware provider, and that makes their future strong. Lumexis are likely to continue to innovate practical technology solutions which will then force larger players to borrow and improve on those concepts, and that is at the heart of their value to the IFE ecosystem.

Global Eagle Entertainment/Row44

What Lumexis is to Hardware, Global Eagle Entertainment/Row44 are to Wi-Fi based On-Demand entertainment. Global Eagle brings a strong set of players to the table. Their acquisition of the Advanced in-flight Alliance AG (AI) allows them to source a wide range of content for their customer airlines. Row44’s license to use Hughe’s satellite infrastructure which gives them a high speed Ku-Band Wi-Fi connection for their customers, allowing for content to be streamed smoothly to passenger’s devices. Row44 has thus far asserted that Ku-Band remains “the lowest risk and most dependable solution for delivering cost effective, consistent broadband service to airlines.” They acknowledge that Ka-Band has promise but insist that it is not yet a stable enough platform, saying: “when Ka-band can be delivered with the same reliability and cost-structure that our airline partners desire,” they will introduce the service.

Not everyone agrees with Row44’s point of view on Ka-Band. LiveTV stands by their Ka-Band offering, powered by ViaSat, touting speeds of 70 Mbps. LiveTV also provides a mix of Ku, Ka and L-band Broadband platforms.

OnAir: The Catalogue Fights Back

The everyman’s Wi-Fi connectivity and content based IFE solution, OnAir, is actually the product of Airbus in collaboration with SITA; now fully owned by SITA. It was developed as a quick solution for airlines wishing to outfit their aircraft with IFE to device, including live content, and Wi-Fi connectivity via Inmarsat’s SwiftBroadband service. It is a powerful platform, powered by Inmarsat satellites, working on Thales and Airbus’ KID-Systeme hardware and infrastructure, and line-fitted at Airbus by airlines who select the system. OnAir can be fitted on both Airbus and Boeing aircraft.

It is a popular connectivity platform for airlines worldwide, such as Singapore Airlines, who we mention above, British Airways, ANA, Iberia, Emirates and others. Airlines like these have their own embedded IFE on board, but they and others who don’t have embedded IFE can offer on-demand entertainment and live television with the OnAir Play system, straight to passenger devices

Looking Forward

Source: Zodiac

Source: Zodiac

Supplier-Imposed Limitations

The offset of research and development costs of products by potential sales, are a determining factor for going forward with all products. In our high-tech world, despite the push for leap-frogging the latest innovation, it really is no different. The product must still be justified by the market. Some innovations which might be clever and user-friendly may be delayed waiting for customers to demonstrate sufficient demand. While tech firms may be able to take certain risks debuting features they believe will sell well, only to find the market turning their backs on them, this is not a feasible approach for IFE suppliers.

When passengers or airlines, like flydubai, gripe about IFE lagging far behind modern tech trends, they express what is increasingly becoming a problem for aviation in many other ways. Changes to aircraft are slow. Even the fastest changes might take a window of 1-3 years to make it from drawing room to market.

As a seat manufacturer, Zodiac Aerospace has an advantage in this respect. Their Zodiac Flight Innovations division has had great success with their RAVE seat-centric systems. Because Zodiac also controls the design, certification, and manufacturing of the seats, they are able to ensure a quick turnaround on new product introductions. They are also able to build seats which compensate for the weight of their particular IFE systems, and to bundle the products to make them commercially attractive to airlines.

Zodiac indicates that their devices are approximately 50% lighter and 50% less expensive than their competitors’ similar product offerings. Theirs is a seat-centric system, with content delivered from a single box to smart terminals at the seats which can store certain content locally in order to reduce the demand on the System Control Unit. It operates on a Linux operating system, features invisible wires, and 720 pixel HD displays. According to Zodiac, which also offers a wireless IFE product, systems designed for delivery to PEDs are good complements to embedded IFE systems, or solutions for short-haul aircraft with no equipment or only drop-down systems onboard, but they are not a substitute for embedded IFE.

All the systems on offer, even those made by suppliers who can off-set development burdens through sales of complementary products as Zodiac does, suffer from a major disadvantage compared to modern consumer electronics: inadequate efficiencies of scale.

Because the units to be sold are never on the scale of modern electronics and tech innovations, there is no pay-off to invest massive resources on R&D to upgrade products with greater frequency. It’s possible for Panasonic to dedicate a larger budget to this, for Thales too. But beyond that, even Zodiac will want to see sufficient sales result from their latest premiere product and sufficient residual sales from their established catalogue products, before they make a giant leap forward.

Aggravating the delays associated with the business case against constant innovation is the reality of the engineering case against it. Even favorable improvements, like reducing the weight of the embedded unit, will require the same major investment in seat re-certification. Any significant change in weight can affect the dynamic testing parameters, any major change of certified components can also trigger a requirement for full certification, unless the supplier can make a strong like-to-like argument with the authorities.

The result is a slow moving market which will never keep up with the significantly higher speeds of change for “everyday” tech.

If anything, this reality makes the strongest case of all for non-embedded IFE options. While airlines will want to present that Theatre experience on certain routes, they may increasingly gravitate towards BYOD options, in order to capitalize on tech’s own hardware advancements while reducing their costs of deployment. Doing so may still involve some investment in new tech to distribute content and provide passengers with other connectivity, branded entertainment, and retail options, but the costs of adopting a new box at the front to wirelessly feed PEDs is marginal compared to an embedded IFE change.

Another strong argument, of course, is the overall weight burden of embedded IFE onboard aircraft. With airlines pushing for lighter seat selections, they sacrifice a lot of weight advantage when they install even the lightest of the embedded IFE solutions. The combined weight of all the screens on seats add up. Airlines pondering whether there is still a business case for printed in-flight magazines are certain to consider whether the heavier screens installed on those seats are necessary.

Many fail to understand the compelling case for weight reduction for airlines, believing the fuel cost to be a sole determining factor. In fact, the revenue benefit of additional cargo loads in the hull often drives the decisions airlines make. Therefore, even in the unlikely event that jet fuel costs plummeted, airlines might not be tempted to step back from the lighter cabin movement.

These two compelling factors aside, there is no guarantee that the percentage of passengers happy to resort to their own PEDs. Some passengers may view the lack of entertainment onboard as another perk the airlines have taken away. Though airlines have a reputation for making these decisions to step back service with cold calculation, the reality is that not even the most hard-shelled airlines want to be loathed. Long haul flights are likely to continue to include some level of embedded IFE as a standard in future, even if coupled with a Wi-Fi to device supplementary product.

The future of BYOD Wi-Fi IFE is big. It will solve a number of problems for airlines who now have no hardware onboard, or who would like to remove outdated hardware from aircraft flying shorter flights. It’s greatest opportunity for growth is precisely that a majority of the flights are mid-haul or short-haul routes.

Tomorrow’s flight is far more entertaining than today’s.

The Danger of Irrelevance

Source: Flickr/ Kensington Rep

Source: Flickr/ Kensington Rep

Regardless of the engineering and economic constraints on IFE developments, IFE products are still compared to the at-home experience by passengers. There is always a risk that these devices, embedded or wireless, will fall out of step with modern technology. Changes to operating systems which affect the interface passengers become most comfortable with, for example, or even changes to the data load from content, may require IFE systems to undergo upgrades which may exceed the capacity of existing hardware. Manufacturers are aware of these risks, and attempting to overcome them in various ways, either through building control boxes and servers with capacity for expansion or by switching over from dumb terminals at the seats to monitors which can cache content locally, relieving some of the strain from various terminals all trying to access the central box at the same time which would slow down overall system performance.

The manufacturers are also aware of the increasing importance of consumers of intuitive and familiar interfaces. Thales, for example, recently revealed screens which are truly touch-responsive (very similar in UX to popular tablet devices), moving away from the heat-sensitive screen receptors which have long forced passengers to touch and hold their menu selections, and towards sophisticated receptors which respond instantly to light touches and swipes. Panasonic also focused on interface and responsiveness improvements in their new products. To further enhance the users interaction with the IFE hardware, and to make using the remote large-screen IFE on Business Class and First Class seats possible, manufacturers have introduced new touch-sensitive controls, similar to smart-phones. Though designed to aid the function when seats are too far from the screen to make touch-screen operation comfortable for passengers, some, like Singapore Airlines, have introduced these controls on Economy Class seats as well. Giving their Economy passengers a First-Class product feature supports the airline’s status as a premiere airline.

All of these features aside, IFE manufacturers will still be under pressure to keep up with the pace of change in new new electronic devices and with improvements to operating systems. Though upgrade capability is built-in to the systems we discuss here, new equipment is likely to be necessary sooner than before.

Future Peek

Ingo Wuggetzer, VP Cabin Strategy Innovation and Design at Airbus, has some interesting insights into what the future holds for IFE.

Wuggetzer sees branded content, and retail onboard becoming increasingly important in the coming years, and allowing passengers to multi-screen their own content at the same time as enjoying the content on offer from airlines essential. He does not foresee an end to embedded IFE, though he does see great possibilities for passenger experience enhancement from wireless IFE to devices and believes that BYOD is a trend that is here to stay.

In the long-term future, Wuggetzer proposes that thin film materials currently introduced for high-end decor by companies by Phillips, which are functionally monitors though they are as thin as wallpaper, could find their ways onto seat backs of aircraft, providing a high-resolution experience and large screens on all seats with virtually no added weight. For now, costs make such innovations prohibitive, but it’s something to look forward to.

Is IFE Effective?

As a product differentiator, it is difficult to say whether IFE accomplishes its goal. Of course, passengers enjoy a superior product onboard, but historically, price, schedule, and routes are the primary drivers for airline selection. On routes which are covered by many major carriers at similar pricing structures, some passengers may select an airline whose in-flight service they prefer, but seat selection far outweighs other cabin service offerings when customers decide. Whether driven by the fact that reservation systems limit their flight details to class of service and seat selection, or simply because passengers would not care even if they had a method for selecting flights based on a number of key service elements, is an open question. In the short term, it does not matter.

As a way to maintain order in the cabin and distract passengers from the discomfort of prolonged flight, IFE works beautifully and like nothing else. It frees up cabin crew to take care of other duties, by reducing the amount of times passengers are likely to call for a cabin attendant simply because they are bored and want some attention.

Incidents of passenger disturbances onboard are on the rise. The root cause for the sharp increase in recent years is unknown, and the basis of IATA’s commitment to study the subject more closely. Alcohol consumption, crowded cabin conditions, limited storage for onboard luggage, a general lack of courtesy by fellow passengers, a number of other factors may be behind it, but IFE helps to mitigate the irritation passengers feel which makes it a necessity for airlines.

Insights and Strategies

  • IFE Unplugged — While embedded IFE is likely a long-term component of aircraft interiors for long-haul flights, more innovations, like the invisible and light-weight wiring introduced by Panasonic and Thales are needed; if for no other reason that the lighter weight and low cabin footprint advantages are substantial. Wireless IFE has it’s clear advantages as well, and as soon as Wi-Fi transmission capacity improves for every-day technology, aviation would be foolish not to capitalize on that tech advancement immediately
  • Content, Content, Content — We must not underestimate the lifestyle standards of the average consumer when it comes to entertainment. Content licensing will also come into play here. If an outside player, on the scale of Netflix or Amazon, even Apple, can convince the studios that regional releases are out of date with today’s consumer demand, then it will be a game-changer, not just for home entertainment but for IFE as well. As the world moves towards greater global integration, facilitated by internet communications, that event may be closer than we think. Apple proved there’s no better way to beat piracy than to make music content more global. Studios would be wise to keep this in mind, and IFE content providers, who have the clout with the studios, must help push the argument along.
  • Prove IFE Advertising Pays — Airline budgets will continue to restrict how much premium content an airline can acquire, and airlines will need to get creative with content distributors to generate branded and location-based content which will both add value to the passenger experience and generate much-needed revenue for the airline. Incorporating traditional advertising may be a tricky move, passengers used to skipping right through commercials at home may not appreciate being bombarded with obvious commercials when trapped in a metal cylinder at 30,000 ft. If airlines can prove to advertisers that sharing the burden of producing custom content will result in revenue, then the true promise of IFE revenue could finally be realized. Airlines must be able to provide reliable viewer metrics, and that will require increasing sophistication of IFE management software.
  • Virtual Retail — Passengers are used to shopping online, and IFE is ideally suited to providing a similar shopping experience. Some airlines are already attempting to expand this convenience on their IFE, but aviation still has a way to go before shopping onboard is as attractive to shopping from home. The industry already understands that people love to shop when they travel, they just need to make it even easier and more convenient. The option of home-delivery will also be essential to long-term success. No one likes to lug their Duty-Free items around with them, especially not with today’s and tomorrow’s limited luggage allowances.
  • Seamless Starts at IFE — The seamless travel experience is a unicorn: Everyone knows it would be ideal, everyone wants it, but no one has yet found it. A smart configuration of IFE — providing links to hotels bookings, car rentals, entertainment and tours while onboard — would go a long way to making this mythical dream a reality. The industry already has everything it needs to realize those options: connectivity, adequate IFE hardware and software, partners well-established through frequent flyer programs. The tourism industry as a whole just needs to realize the puzzle pieces are all present, and put the thing together once and for all.

Endnotes and further reading