Embedded inflight entertainment – will it stay or will it go now?

Statistics detailing the proliferation of smart phones and tablet computers are staggering. Ten years after becoming broadly available, smart phones have reached about 40 per cent of the US market, says Michael DeGusta, a contributor to the Massachusetts Institute of Technology’s Technology Review.

According to comScore, more than 19.3 million people in Japan owned smart phones in February 2012, up 28 per cent in just three months over November 2011.

As of February 2011, worldwide smart phone shipments had increased 87.2 per cent year-over-year, says The International Data Corporation, noting that vendors shipped a total of 100.9 million smart phones during the fourth quarter of 2010, up 87.2 per cent from the 53.9 million smart phones shipped during the fourth quarter of 2009. For the full year, it says, vendors shipped a total of 302.6 million smart phones worldwide, an increase of 74.4 per cent from the 173.5 million smart phones shipped in 2009.

As incredible as these growth rates are, tablets are moving even faster. Morgan Stanley Research’s ‘Internet Trends 2010’ famously highlighted that the Apple iPad was one of the fastest selling consumer computing devices ever, taking just 28 days to sell one million units.

“Data suggests that over 10 per cent of US households have tablets, just two years after the launch of the iPad. Almost no technology ever has approached that rate of uptake. While less essential to modern daily life than a phone, it still seems likely that tablets could be ubiquitous by the end of the decade,” says DeGusta.

The applications that personal electronic devices (PEDs) avail themselves to also show no sign of abating; they can effectively replace our compact camera, book collection, video player, music player and more. They will ultimately replace our boarding pass and wallet as well. This reality is already threatening the very existence of even DVD and Blu-ray players, which are “well on their way to being relegated to the role of legacy media support and not likely to receive much investment from consumers going forward”, says DeGusta.

Couple these developments with the increasing deployment of inflight connectivity and the debut of new wireless inflight entertainment (IFE) solutions that allow passengers to stream videos to their own devices, and it’s logical to ask the question – Does it make much sense for airlines to offer embedded inflight entertainment solutions?

THE END OF SEAT-BACK IFE?

Cathay Pacific has long been considered among the leading carriers for embedded IFE; it offers audio/video on demand systems on all long-haul aircraft, with content that includes more than 100 movies, 500 TV programmes, 888 CDs and 22 radio channels. Personal TVs are available for everyone travelling on all other aircraft with up to 20 video and 22 radio channels. But CEO John Slosar made headlines recently when he was widely reported as telling HK Finance, “Given the popularity of tablet PCs [personal computers], passengers no longer need some of the onboard entertainment facilities, like for example, the seat-back personal TV screens.”

A decision by Cathay will not be undertaken in the near-term, however. Slosar reportedly added: “It remains an idea at the present time. The carrier would wait for another five or six years before tablet PCs became more popular with the travelling public at large before taking action.”

It’s clear, however, that installing embedded IFE is a practice that’s facing growing scrutiny, as Michael F Earley, senior manager of the development and design department for Virgin Airways relates, “We are a niche industry in a slow moving, heavily regulated environment, with long lead times, major capital investments and long pay back times, trying to keep pace with modern consumer electronics. Inevitably this does not compute so something will have to give.”

Such sentiment has led to suggestions by some industry observers that airlines would be better served by moving to wireless on-board distribution of IFE content and leave passengers, literally, to their own devices. “But that technology is still in its infancy,” adds Earley, “especially if the aim is to provide streaming for hundreds of devices simultaneously.”

Wireless IFE providers generally dispute this claim, however. Most now say they can support about 50 people per wireless access point (WAP) or about 250 people on a generally standard five-WAP configuration.

MAYBE, MAYBE NOT

The weight savings alone would be a tempting enough thought for many airlines; a whole host of cables and screens could be replaced by on-board Wi-Fi, leaving passengers to access the Internet and IFE content through their own devices, which they are bringing aboard anyways.

“I think that for some, perhaps low cost carriers, this would provide a way to offer an IFE product for sale at a minimum upfront investment,” says Earley. “However it would be a brave step for a long haul full service airline to take, unless and until you can be certain that all customers have a good quality PED. If a family of four has one iPad between them, who gets to watch the movie first?” says Earley.

Yet in such a situation, the potential surely exists for a carrier to monetise its IFE by providing equivalent devices for hire to those passengers who haven’t got a sufficiently capable PED.

Virgin’s Earley is quick to point out some obvious shortcomings with that proposition, “This is definitely possible, although there is a certain irony in striping out cables and screens from the seatback, only to load tablets and power cords back into galley carts. Then there are the logistical questions of stowage, recharging and cleaning of the devices.”

Michael Reilly, chief operating officer for inflight entertainment content and technical services provider Stellar Inflight, can’t envision such a solution becoming widespread in the immediate future, “I can certainly see an emergence of wireless with passenger owned devices for low-cost carriers and short haul and regional aircraft, but for premium carriers and long haul aircraft I think in-seat IFE will be around for the foreseeable future.”

WIRELESS CABIN

The technology required to stream content in the cabin isn’t a stumbling point. Lupita Ho, principal marketing manager, cabin systems for Rockwell Collins says that at least when it comes to the business jets they work with, “Enabling content in the aircraft to stream wirelessly within the cabin it is almost a non-issue”.

BoardConnect from Lufthansa Systems – which utilises a single server and up to five WAPs – has received a lot of attention of late.

Qantas has been trialling BoardConnect on a single Qantas Boeing 767. And Virgin America in September 2011 announced it intends to use BoardConnect to both stream content to passengers’ own PEDs as well as to seat-back screens beginning late this year.

The carrier has reason to believe it will see strong up-take. As the first airline to offer inflight connectivity fleet-wide, Gogo customer Virgin America says that up to one-third of their passengers are regularly logged on to the Internet during flights.

Meanwhile, Gogo’s own wireless IFE offering, Gogo Vision, competes with BoardConnect and is being offered on American Airlines and Delta Air Lines.

THE ELEPHANT IN THE ROOM

Hollywood studios and content service providers have been historically reticent to provide content in any ‘over the air’ format. “Without a doubt, piracy is the main concern, especially for the premium ‘early window’ or pre-US DVD/Blu-Ray release content. With current practices, there are measurable systems in place to prevent or trace security issues with content. With personal devices, it is currently viewed as too risky to allow premium content to stream due to the availability of software that opens opportunities to access content illegally,” says Stellar’s Reilly.

It’s a situation that Lufthansa Technik’s Dave Crossett, principal executive for strategic sales and marketing, has also encountered in the business jet space, “The studios are worried about allowing licensed content on an ‘open wireless network’.  Unlike the wired networks that are used today, that can be more easily approved by individual studios and content providers for their adherence to studio approved standards, wireless networks bring new risk that must be rigorously monitored.”

However, it’s a fluid situation, “I do believe the current reluctance of the studios to offer premium content on personal devices will change, it’s just a matter of time and agreement on sensible security protocols, such as forensic watermarking and other technologies, as well as demand from the airlines,” says Reilly.

Despite the current challenges, wireless content streaming is moving ahead, as exemplified by Stellar’s situation. Reilly explains, “We’ve completed technical testing on two different wireless platforms for two different customer airlines and these platforms will be flying regularly from August and September 2012, respectively. Consequently, we’ve also worked with the content owners and distributors on their licensing policies for the new technologies and we’re ready to roll. We love that some of our customers embrace new technology quickly and we support them through the process. Wireless is here, it has a big future and we’re excited about being a part of the forefront that delivers content wirelessly to both airline owned and passenger owned devices.”

Hardware vendors meanwhile are tackling the technical challenges from multiple directions simultaneously. “We are developing a wireless system that provides a framework for content protection while only requiring that a device has an 802.11 interface and a browser,” says Lufthansa Technik’s Crossett. “We can demonstrate this solution today. At the same time, we recognize that such a system may not be approved; therefore, we are also evaluating a native application, that can be downloaded via individual app-stores as an alternative,” he concludes.

In the meantime, another option is to by-pass premium content altogether, allowing passengers to enjoy their own media. How attractive that proposition ultimately is for potential passengers is arguable. “Replacing first run movies and quality TV with a link to YouTube doesn’t feel like a step forward to me,” argues Virgin’s Earley. “However if cloud storage becomes a success and the airline can offer me a cost effective link to my personal media collection, then I would be more interested,” he adds.

WALLET, I DON’T NEED YOU ANYMORE

Another key area where PEDs threaten to upset the status quo is the manner in which we pay for goods. Near Field Communication (NFC) refers to the use of a Radio Frequency Identification (RFID) chip. Many credit card companies are equipping their credit cards with NFC chips but many smart phone vendors are also integrating them into their handsets. At present handsets including the Blackberry Bold 9790, Samsung/Google Galaxy Nexus, HTC One X, LG Optimus, Nokia 603 and Sony Xperia S feature an NFC chip.

From a technological standpoint at least, an NFC-enabled smart phone could supplant not only seat-back IFE devices for entertainment but also the money and credit cards we carry for purchasing. “We see NFC as the next big thing, allowing a passenger’s phone the ability to, be a boarding card, pay for on-board extras, log the passenger into the on-board system etc. In its report released in June last year, Juniper Research indicated that global NFC mobile contactless payment transactions would reach nearly $50 billion worldwide by 2014,” notes Geoff Underwood, managing director of InFlight Peripherals Ltd.

NFC-enabled smart phones would also provide some additional benefits to airlines when it comes to on-board transactions. Michael Planey, an IFEC expert with HM Planey consultants explains the way things typically work with a standard card-reading device on board an aircraft. “The card-reading device captures the payment data and compares the data against a series of algorithms and should validate the expiration date and the format of the number on the card. This is the most basic level of security.” For airlines this provides no way to validate that the card being used belongs to the person using the card; only that the card is likely to be genuine (or not). This is in part why ‘Chip and Pin’ technology was introduced; “It requires not only the physical possession of a credit card, but the use of a PIN to essentially authenticate the owner and user of the card at the same time,” notes Planey. However, Chip and Pin has not been implemented in the United States. Does this potentially leave the door open for NFC-enabled smart phones?

“NFC has a place in the discussions but it is a future technology that really isn’t making in-roads into IFE right now. That could change if the next generation of iPhone joins the NFC crowd,” says Planey.

It seems that fiscal considerations, not technological constraints, may decide the manner in which passengers interact with IFE systems for content and purchasing in the future. Whilst the number of people carrying smart phones and tablets continues to increase at hitherto unseen rates, it remains to be seen how beneficial it would be for airlines to retire embedded IFE in the near-term.