Content service provider Interact is diversifying its business with the launch of a new tour company, and is studying opportunities to produce content for distribution to airlines as well as to TV home viewing audiences.
Irvine, California-based Interact works intimately with small- and medium-sized airlines to meet their IFE content needs. Like other CSPs, Interact’s business model has evolved throughout the years; the company does far more than license Hollywood content for airlines.
“We work with our clients as IFE consultants from consulting with them on hardware issues, content issues, branding, and creative production (such as safety videos, arrival videos and GUI production. We also provide advertising revenue. So, as you can see, while the provision of content is certainly still a very important and basic part of our service, the CSP today has to be much more than that, and that’s what Interact is focused on – providing all the needs that our airlines have that go beyond putting a movie on board,” says Interact CEO John Bruckman.
Every airline has different requirements. Some just want the content, says Bruckman, but others say, ‘Wait a minute, we’re moving from an analogue [IFE] system that was tape-based and had limited applications to a digital system with a gazillion different applications; how can we take advantage of this system to be able to sell things to passengers, instruct them on how to use the system; maximize our marketing, and create new experiences for the passenger using this versatile system?’
Interact customers Hawaiian Airlines and Avianca, for instance, which were “not long ago tape-based airlines are now AVOD
and they’ve expanded their IFE capabilities tremendously through the IFE systems”, says Bruckman. Interact was also recently selected by Aircalin to design the carrier’s GUI for its newly retrofitted aircraft with Panasonic Avionics AVOD on board.
But even as it continues to strike new deals in the IFE world, Interact has found it necessary to enter “areas other than IFE because IFE has become so cutthroat and so competitive, and margins are shrinking for a variety of reasons so we’re forced to look at other business opportunities and paradigms that have nothing to do with IFE”, according to Bruckman.
It is known that there has been continued price deterioration in the marketplace. As the number of flights increases, and the number of IFE-equipped aircraft increases, and the number of routes on which IFE is viable increases, and the volume of content which is stored on the aircraft increases, the price-points go down. With the exception of a couple of years in which the IFE industry took a major hit, this has meant increasing gross content revenues corresponding to decreasing price-points.
Bruckman personally believes there are “a handful of CSPs out there that provide their services at very, very low cost”. He says margins have shrunk to a point “where it’s practically impossible to compete”.
Interact has digitally networked satellite offices in Sydney, Rome, Sao Paulo and Bogota. The company will continue to provide its services to airlines, but it has “just started a tour company in Italy that is providing travel experiences for the middle- to upper-level traveller who wants something different than the crowded bus taking them around Rome to the Vatican and the Coliseum, and it’s these kind of lifestyle businesses I’m interested in developing”, says Bruckman. “This is the first of what will be several businesses that will take us out of co-dependency of IFE.”
He adds: “We have other ideas. We’re looking at film distribution opportunities where we represent a certain slice of content as a distributor; we’re looking at producing content such as a ‘Lonely Planet’-type programming – the type of programming for distribution to not only the airlines but to TV, etc.”