The old adage “content is king” may be shifting slightly. In the in-flight entertainment market increasingly “connectivity is king.” For the providers of the IFE systems having a strong connectivity component to their offerings is key to growing their business or even just maintaining the existing customer base. In-flight entertainment and connectivity vendor Thales made a move to that end today. The company has agreed to buy out LiveTV from JetBlue, a move many have considered overdue from the airline for a few years now. Financial analysts have seen the LiveTV subsidiary as ripe for cashing out and some also saw limited potential for future customer acquisition because of the ownership structure. Today’s announcement addresses those concerns and also shifts the LiveTV operation to a company which will be wholly focused on growing it.
The $400mm purchase enables Thales to add to its already significant in-flight entertainment portfolio. Thales has existing products which allow for streaming on-board media, traditional in-seat IFE and partnerships to integrating satellite-based connectivity. The LiveTV products should integrate well with this portfolio, augmenting the offerings available. And the broader suite of available services should help Thales to pick up more customers. In a statements Jean-Bernard Lévy, Chairman and CEO Thales notes,
[LiveTV] will improve our positioning in the high growth business of In-Flight Entertainment and Connectivity. Our aim is to offer the highest performance and most competitive and flexible connectivity solution to airlines regardless of their fleet-size, aircraft type or route structure. Passengers increasingly expect broadband internet services at home, at work and on the move. Airlines want to enable their passengers to have access to this connected environment within the aircraft, allowing them to interact with both social media and professional networks while they travel. Thales will provide solutions that cater to this need.
In the US market LiveTV’s largest customers are JetBlue and United Airlines, both of which have the DirecTV and Excede wifi product from ViaSat. Outside the USA the group has deals with several carriers, including an in-flight connectivity partnership with Aer Lingus which should enter service in the coming months. At the same time, however, competition in the connectivity market is heating up. Rather than continue to work the LiveTV as a partner ViaSat went directly to El Al for their latest wifi deal. That’s a setback for LiveTV, of course, but not one which is impossible to overcome. And gaining access to the broader technology platforms within the Thales group will allow LiveTV to innovate and integrate more rapidly. Take, for example, the Thales SDK for their Android IFE systems. The group can now potentially include the LiveTV system as part of that API, depending on which features the airlines choose to purchase.
Thales has also inked a deal with Gogo a year ago, looking to grow into the Ka-band connectivity market. The deal was non-exclusive and focused on using Gogo as a service provider for the Inmarsat GlobaXpress Ka-band connectivity which is expected to hit the market in 2015. Having the LiveTV system available, particularly with the ViaSat relationship, means that Thales is in the Ka-band market today rather than waiting.
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