GEE Targets Rest of World Opportunities for IFC

By Juliet Van Wagenen | January 11, 2016
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[Avionics Today 01-11-2016] Global Eagle Entertainment (GEE) is setting its sights on the 93 percent of the international aviation market that has yet to equip with In-Flight Connectivity (IFC). Dave Davis, CEO of IFC and In-Flight Entertainment (IFE) content provider GEE, spoke at the 2016 Internet, Media and Telecommunications Conference in Las Vegas last week, revealing that the company is focusing sales efforts on airlines outside of North America for the foreseeable future.

Bahrain International Airport. Photo: Bahrain International Airport

“The domestic market is about 70 percent penetrated. If you look internationally, we estimate it’s about 7 percent of the total addressable market that has some form of in-flight connectivity on board, and it’s in its very early stages,” Davis said.

Davis believes that while airlines are cautious to make decisions on equipping aircraft with IFC as the implications have a large and lasting impact, as international airlines begin to enable IFC onboard their aircraft, the competition will compel other airlines in the region to quickly follow suit.

“Once in-flight connectivity is sort of seeded in an area in a relatively significant way you’re going to see other carriers in the region really forced into making very quick decisions and begin adopting the product,” said Davis.

The company started out as the main provider of content for IFE onboard commercial aircraft and has recently begun to heavily pivot its efforts toward the IFC arena. GEE acquired two companies in the summer of 2015 to jumpstart its operational connectivity business unit. On the passenger side, the company currently has about 700 aircraft installed with its Ku-band satellite connectivity system and can rely on a backlog of 200 more for the next two years. To sustain that backlog and growing revenue, GEE will turn its sights toward segments outside of Europe and the U.S. in the next few years.

“Regionally, I think there is going to be more activity in Latin America despite some of the economic issues that you are going to see in 2016 and some of the announcements you are going to see there,” said Davis.

He also hinted at the possibility of picking up IFC contracts in India as well as China, a place where the company has invested heavily, recently announcing a contract with the Hainan Airlines Group of China to launch GEE’s Airconnect In-Flight Connectivity (IFC) solution aboard 10 aircraft alongside Shareco.

“And I would expect a major decision by some sort of European carrier some time in 2016,” Davis added carefully.

GEE is still in the midst of connectivity trials with Air France and French telecommunications provider Orange aboard two of the airline’s A320s, which Davis believes will turn into a successful conversion to a narrowbody rollout in 2016 after the trial commences, “very, very soon.”

Davis admits there is no “best in class” solution for IFC on the market as of now, and satisfying new international customers will require a mix of approaches and companies.

“Some airlines are very interested in controlling the branding, controlling the pricing and they are going to pay for the service in a more direct way to the provider. Some airlines are less interested in controlling that and the connectivity provider will set pricing and do other things,” said Davis.

He also noted that it’s likely providers will enact large partnerships to provide tailored solutions for each airline.

“Our Air France situation is in partnership with Orange. I think the business model is going to continue to evolve, it is going to evolve regionally and it is going to be very carrier specific. I don’t see one business model taking over,” said Davis.

As IFC adoption takes precedent in the next few years, Davis also spoke to the possibility that the company’s content curation business could suffer as streaming video begins to take over in the air, mirroring the shift to Over-The-Top (OTT) providers in the home, such as Netflix and Hulu. Davis said the company’s content side of the business has done “gangbusters” in 2015, picking up an additional 20 airline contracts for aviation content and contributing significantly to the year’s $415 to $435 million in revenue (as of the third quarter). But as far as airlines and customers moving away from on-board IFE content, “we haven’t seen any sign of that,” said Davis.

“Even as the price of bits gets lower it is still pretty bandwidth intensive to stream content. [It is] much more efficient to store large pieces of content on board the aircraft, which can then be viewed on a seatback system or streamed to your handheld device through the Wi-Fi network on the airplane,” he said.

Times are slow as far as connectivity contracts in the international market, but Davis sees 2016 as a pivotal year in convincing international operators to equip.

“Decisions have been being made, it hasn’t been at a complete standstill. There have been a number of widebody installations, we announced Flydubai and the Hainan Group in China as customers, so it’s not as if this has ground to a halt or anything, but this is sort of an inflection point on the S curve,” said Davis. “So 2016 is hopefully — and I believe it will be — the year of acceleration and the year of more decisions being made.”

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