Digital TV Hits The (Formerly) Friendly Skies

By Lucy Cohen

In light of recently implemented security precautions, airline passengers — often separated, one way or another, from their books, iPods, cell-phones and MP3s against their will — may have to rely on in-flight entertainment (IFE) more than ever before to keep them occupied while flying. Let’s face it: the flights are longer (to save money, one often has to fly longer distances), the seats are small, the food on board is terrible (and more expensive) and delays are frequent.

Luckily, the in-flight entertainment industry is mercifully prepared for a heightened demand. Thanks to digital technologies becoming available throughout aircrafts, more passengers are being treated to better quality entertainment, picture and sound.

Maria Isak
Pilot Productions’ Maria Ishak

“Most of the changes that have taken place in the airline industry in the last few years have centered around technology,” said Rob Brookler of the Virginia-based non-profit organization, the World Airline Entertainment Association (WAEA). “In the last year, a shift has continued toward digital systems that allow viewers to watch content on demand.” 

Passengers’ IFE choices have surpassed traditional main screen entertainment to include Audio/Video-on-Demand (AVoD). They now have their pick of a wide selection of digitally stored audio, video and web-based content, which they can order up at any time.

Digital IFE systems work much the way digital TV works, allowing for more niche channels and more content. “Users can access, literally, hundreds of hours of content and enjoy a much more personalized experience,” said WAEA’s Brookler.

And, while, in the past, AVoD services were reserved for the premium seat classes, they are becoming more ubiquitous in coach as well. “Today, we have over 60 percent of our fleet installed with digital AVoD,” said Dave Tharp, senior manager, Development & Logistics at Onboard Media at Virgin. “[The AVoD technology] allows each passenger the ability to start, stop, rewind or pause any program. Technology has changed IFE radically in the past 10 years,” he said.

New technologies and increased choice do not just benefit passengers; there are also provide major advantages to film and TV series distributors. “We have seen the volume of content airlines acquire continue to increase,” said Rob Bassett, sales executive, In-flight Entertainment, Granada International. “One reason for this seems to be that [the airlines] are able to exploit programming over a longer period, with shows placed on the main cabin screen and then transferred to the VoD system,” Bassett said.

Ed Harris, manager, Ancillary Sales at CBS Paramount concurred. “In the past, a show needed to be an established hit before it became an attractive commodity in the airline market. Today, we can’t clear shows fast enough. The demand for new product is enormous,” he said.

Maria Ishak, Sales and Marketing coordinator for the U.K.’s Pilot Productions, a small company with a flagship travel show called Globe Trekkers, said, “We are seeing current airline clients demanding more content as well as new airlines becoming clients.” Digital systems open up the market to smaller distributors and producers like Pilot that are often unable to place their fare on the big screen but have more luck with niche channels. Ishak pointed to new in-air travel channels as providing the perfect homes for Trekkers.
Also, Companies with large libraries of archived product (which were often passed on in favor of new blockbusters) can now exploit their classic series and films. In addition, the personalized experience made possible by digital systems opens the business to regionally produced fare.

For these reasons improved in-flight entertainment is being viewed as a potential cure to the airlines’ highly publicized economic woes. “The quality and range of an airline’s in-flight entertainment has become a serious competitive advantage for airlines and an increasingly significant way of attracting customers,” said Granada’s Bassett.

With new digital capabilities, however, come some additional obstacles. “Piracy is a major issue for the studios,” said WAEA’s Brookler. “The airline industry had to work hard to prove to the studios that there were encryption capabilities to keep programs from being leaked.”

While there’s no doubt that distributors have welcomed the increased appetite for content, it’s not necessarily a cash cow. “Airline budgets are not big, so airlines are not going to be big spenders. They invest in technology more than content,” explained Brookler.

“While the airlines are buying more films, there’s less income per film,” said Michael Covell of independent distributor Entertainment in Motion. “The airlines have increased their budgets for in-flight entertainment, but the income per film is definitely down.”

“There is a greater capacity for programming, which should lead to a boom in sales for distributors,” said Vicky Smith, Inflight and Non-Theatrical Sales Executive, FremantleMedia Enterprises. “But, despite this growing need for content, there does not seem to be an increase in budgets and this is an obvious area for airlines to address.  At present, it is acceptable given the relatively small number of VoD planes available, however, as this number grows, distributors must monitor this closely to maximize opportunities.”

The business model has become a bit more complicated, as cost assessment is not as easy with VoD systems as with main screen systems. In the past, the business model for airline entertainment was similar to the theatrical sales model. A content provider would decide on a fee for a series or film; then to calculate a final price, the airline would take that fee and multiply it by the number of aircrafts on which the film or series would be shown. The average fee would be somewhere between $35 and $75 per aircraft (depending on how big an airline’s fleet was — the larger the flight, the smaller the cost-per-flight). Package deals existed, so that airlines could receive a discount when buying a bunch of movies from a particular studio.

Now, individual VoD titles only reach about 10 percent of the total number of viewers who watch main screen entertainment offerings. So content providers can only demand a fraction of the price they can get from an overhead movie.

To help these complicated deals move along more smoothly, airlines are outsourcing more than ever before, using aggregators they call content provider services — companies that represent a bank of airline clients and handle content acquisitions (though direct distributor-to-airline deals are still the only way to go for some content providers). John McMahon, vice president of the Germany-based Atlas Air Film & Media Service, explained that his company “gathers information from content providers on a monthly basis and samples all the content available.” What he’s noticed in terms of his clients’ demands are both “in volume and variety.  There’s been a real departure from what was essentially family fare.”

As airlines do away with their large screens, riskier movies are replacing the traditional family-friendly flicks of the past. For example, an unedited version of Brokeback Mountain was recently offered on Delta long-haul flights. While many airlines are taking more chances, the real gambles are still reserved for the Asian and Middle Eastern airlines.

As every executive polled unanimously agreed, U.K.-based Virgin Atlantic is the airline most willing to take chances. It was the first airline to offer seat-back video in all classes, in 1991. Owned by media mogul Richard Branson, it’s no surprise that entertainment is a high priority. “Virgin Atlantic prides itself on being the first to introduce new features, continuously adding to the amenities we already offer,” said Virgin’s Tharp. Their personal entertainment systems now offer over 60 complimentary films on-demand with the ability to pause or rewind a film and see it in its entirety — the way the director wanted it to be seen.

But there are still certain genres that are off limits for all airlines, namely anything about hijacking, terrorism or plane crashes.

“Many airlines would like to think that their demands have changed, but the truth is they’re still trying to book the most popular movie without being too scandalous,” said Linda Palmer, svp, Non-Theatrical Sales at Buena Vista. “While the new equipment makes it possible to air some edgier shows, the airlines are usually looking for something sufficiently entertaining without being offensive.”

As technology advances, viewer choice is expected to increase as well.  “People will have more opportunities to choose their entertainment,” predicted Palmer, “with more niche channels popping up.” CBS Paramount’s Ed Harris agreed: “[We’re likely to see] digital systems fully replacing tape-based systems, PPV models and satellite-delivered live TV.”

According to Fremantle’s Smith, “The future of in-flight entertainment lies in two areas: the technological advances and the greater choice for passengers. IFE helps to attract and retain customers, which invites competition between airlines and, in turn, drives creativity and new invention. VoD is the medium term future for in-flight entertainment, and further technological advances will allow more interactive capabilities, i.e. Internet, email, gaming, individual devices, and age-restrictive channels.”

Virgin’s Tharp concurred: “All eyes, at present, are on connectivity and how this will manifest itself onboard. Our current SMS and email services are growing in popularity and we’re in the process of launching a new service, called AQA (Any Question Answered), giving passengers the ability to ask questions directly from their seats and, via satellite, get answers [from] a London-based research company. Our top priority, however, is delivering reliable entertainment. There are just as many technological advances out there that can improve reliability as those that can deliver new features. The challenge is to get the right balance,” he said.

WAEA’s Brookler said he looks forward to the day when pliable seat-back screens roll down as part of the seat — increasing bandwidths and decreasing hardware — allowing for a higher quality viewing experience for passengers and a lowered expense for the airlines.

Brookler and others expect the trend for passengers to bring their own portable device onboard to continue as well. “We’re not sure exactly what the effect of people bringing iPods and portable DVDs will have — it could make in-flight entertainment redundant,” said Buena Vista’s Palmer. But she doesn’t seem too worried. “The demographic you’re trying to reach on a plane is older than your average movie theater-goer, so I don’t think we have to worry too much about them bringing their own portable devices.”