Airlines to Provide Streaming Video

Streaming video will provide airlines with another source of ancillary revenue.

Sept. 18, 2011— SAN FRANCISCO, Calif. -- In-flight entertainment is going BYOM: bring your own monitor.

Virgin America recently announced a new in-flight entertainment feature coming late next year that will allow customers to download video and audio files via Wi-Fi connectivity to their personal electronic devices, such as a phone, laptop or tablet computer.

Row 44, an in-flight Internet provider that uses satellites, also said that it'll introduce a video streaming service later this year on some aircraft flown by its largest client, Southwest Airlines.

American Airlines announced in May that it's undertaking a similar experiment for streaming entertainment files to passengers willing to pay for them.

The forays by airlines into the more personalized format is an acknowledgement that passengers increasingly prefer their mobile devices for entertainment. Now that nearly all major domestic airlines offer in-flight Wi-Fi, it's cheaper for airlines to ditch expensive seatback monitors and let customers use their own devices.

Airlines will also charge for content, giving them another source of ancillary revenue.

An addition to Virgin America's Red in-flight entertainment system, the new feature will give passengers the option of watching its library of movies or TV shows (or listening to music) — currently available only on its seatback monitors — on their personal devices. Those who are unable to finish the movie that they paid for can take it to go, says airline spokeswoman Abby Lunardini. Virgin America will charge $5 to $7 for a movie and about $2 for a TV show.

Virgin America will keep its seatback monitors, which are installed on all 40 planes.

A server that Virgin will put on each plane will also allow the carrier to increase its capacity for more video and audio files that can be uploaded instantly.

The service will be introduced initially on 10 percent of Virgin's 160 daily flights and added to more over the next few years.

It also envisions enhancing the tool eventually so that passengers can view entertainment offerings, pre-purchase and create their movie/song lists prior to boarding, Lunardini says.

"If you're standing still in this place, you're going backwards," says Virgin America CEO David Cush. "We could stand pat, and let them catch up, or we can push the envelope."

The system, provided by Lufthansa System and currently used on German charter Condor, has the potential to improve the Virgin passenger's experience while helping reduce the weight of the in-flight entertainment equipment aboard the aircraft and thus slice fuel costs, says Henry Harteveldt, airline analyst at Atmosphere Research Group.

Virgin America isn't alone in trying sell the pay-per-view concept to smartphone-toting passengers.

Using personal electronic devices, Southwest Airlines' customers will be able to select from a lineup of movies and TV shows from the studios Row 44 partnered with, including Disney, Universal, 20th Century Fox and Warner Bros.

Among the video content to be available are live Major League baseball games and broadcasts from CNBC, Fox News Channel and Versus (to be rebranded NBC Sports Network early next year), as well as episodes of Friends, Glee, The Office, Modern Family and The Three Stooges.

"Passengers already bring their own Wi-Fi devices onboard. The growth in that market has been staggering," says Howard Lefkowitz, Row 44's Chief Commercial Officer.

In May, American Airlines and its Wi-Fi Internet service provider, Gogo, announced that they are testing an entertainment option for streaming movies or TV episodes to Wi-Fi enabled devices.

The carrier plans to introduce it to more aircraft later this year if tests go well and the Federal Aviation Administration signs off on it.

American Airlines passengers will pay about $3 to $5 for a movie and $1 to $3 for a TV episode. Customers who want to buy a movie or TV episode won't be required to pay for Internet access to see them, which could make the pay-per-view option attractive.

Gogo charges $12.95 for a day of access ($9.95 for 1.5 hours to three hours; $4.95 for up to 1.5 hours).

Gogo uses an air-to-ground technology to transmit data, but the video service won't use that pipe for its pay-per-view service. Instead, the entertainment will be stored in a server on the plane to ensure that the Internet speed for other passengers won't be slowed, says Doug Backelin of American Airlines.