Yes I know that slogan is well-worn by now – but seriously – where is the money in IFE?
You would think that inflight entertainment – being a high energy, extremely creative sector (the only aviation sector which actively brings Hollywood into the flying game) – would have money to burn. Given all the branding and advertising potential it offers up… especially in the digital media. Inflight entertainment, by definition, should boast the thrills and spills of creative content and lashings of corporate sponsorship and money, surely? Prior to 9/11, that certainly was the case. I remember the frills at least – on the banqueting chairs at the WAEA gala night for example. And to date, the biggest IFE vendor Panasonic maintains a swish suite at the annual WAEA conference & exhibition. But sadly the frills in our market are diminishing.
Why? There is no longer a cache of money to be sloshed around in IFE or even the newer sector of inflight connectivity. If you cast your eye over most of the suppliers and service providers they are making their money elsewhere. That is not to say they are not making money in IFEC (inflight entertainment and communications), but the big IFE veteran companies, especially in aircraft technology, rely on a wider portfolio. Thales and Rockwell Collins are major purveyors of defence, aerospace and avionics hardware and software. Even in the handheld IFE sector the major players have a diverse portfolio, in which IFE plays a supporting role. digEcor is bred from Wencor, the PMA parts provider, and IMS has a widening portfolio of its own. E.Digital is a specialist in software applications beyond IFE.
OnAir is part of Airbus – a brand name which speaks for itself. AeroMobile is part of Telenor. The list goes on.
This begs the question – is IFE a profit center in its own right? Or does it need to be cross-subsidised by other profit centers within a single corporate entity?
Certainly the success of Panasonic Avionics suggests that at its maximum commercial strength, the market is more than sustainable. Although Panasonic is a consumer brand name in its own right, Panasonic Avionics is one of the few if not only companies, that is an autonomous IFEC vendor with a dominant share of the IFE market.
But this is not always the case for every company boasting a powerful parental brand name. Connexion had the might of Boeing behind it, but it still folded. Sony Trans Com was sold on. There are companies before my time in this market who suffered a similar fate. Some of you will know who they are – you might have even worked for them.
What I do observe is that standalone IFE companies find themselves isolated commercially and more vulnerable to the cyclical nature of the aerospace and aviation sector. There was a company called Delta Beta that used to do the rounds at the major shows. It had great ideas and its products often had the ‘wow! factor’ but it never seemed to get off the ground. Independent companies like these, however novel their ideas might be, are sometimes destined for consolidation or … ominously, collapse. They require large sporadic injections of venture capital to cope with the onerous gestation cycles bringing product to market. We all know that this process, from inception to production and certification can take years, up to a decade even.
That is a long winter for some companies with no parental capital to draw from. And if and when these niche IFE companies stumble, the remains and assets are picked over, and the talent sometimes moves horizontally to a former rival vendor.
History points to the need for a diverse proven portfolio as a cushion to the vagaries of the inflight entertainment and connectivity market.
In this market, you have to show up, keep your visibility high and keep talking to keep selling. It is no good to talk the talk though. You have to walk the walk.
There have been pioneering individuals – both at airlines and vendors – who actually were responsible for some of the lasting innovations in our market. I could be talking to them for years, and then out of the blue get an email to say they have moved on, leaving our industry, or turning to consultancy. They are like shadows disappearing into the night. Occasionally, one or two such pioneering individuals re-emerges as a major protagonist with a rival vendor or airline.
Recession or no recession, the fact is, that IFEC is a brutal market. It takes no prisoners. You need a lot of energy, a smart contact list, access to capital and resilience to be ahead of the game. So why do we stay in it? Because it is tough. Survival of the fittest. If you can make it in IFE, you can make it anywhere.
