Is providing pay per view still viable?

Accommodation providers are frustrated and confused; unsure about where the future of in-room entertainment is going.

Things are moving at such a fast pace in this ever-changing technological climate that tech savvy guest expectations are increasing rapidly. These expectations have changed so much that, for accommodation providers to keep up, strengthen their service and plan for the future it has become a minefield of choice.

Research shows that the much-loved television is, and will remain, the centerpiece of a hotel room. Research shows that 90 per cent of hotel guests still turn on the guest room TV with higher expectations then ever before; 75 per cent of guests expect a TV at least as good as what they have at home and 60 per cent expect it to be even better!

Most guests expect a variety of TV channels ranging from local channels to cable services but are generally not willing to pay for them. Over the last decade there has been a steady decline in hotel movie rentals and most guests do not order hotel pay per view movies any more. So much so that video on demand is no longer seen as a hotel must have for most hotels. In addition, an increasing number of guests bring their own laptop, tablet or digital devices to watch their own stored movies or download content directly from the Internet.

The overall viewing habits of most people have changed in recent years; people don’t sit down at a certain time to watch a favorite show anymore. Most commercial TV stations stream their shows over the Internet to be watched on-demand, one such channel is the BBC iPlayer and its usage data shows a clear divide between live TV and on-demand content, with regular surges for online shows at a later time to the live show.

Brendon Granger from Technology4Hotels agrees that there has been a huge change in viewing habits he says, “We now have time shifted TV. If you haven’t recorded your favourite show on your personal video recorder, then you can watch it via the Internet.”

This shift in viewer habits causes Mr Granger to doubt the future viability of pay per view movies in the accommodation industry, he adds, “People also have hard drives full of movies. Years ago we used to go to the video store and get a movie to watch on Friday or Saturday night. Now we just watch one from the hard drive that is directly connected to the TV or something from the Internet. It’s the same when people travel.”

Mr Granger believes that the future of in-room technology is less about what is provided (IPTV, pay for view movies and Foxtel) and more about accommodating what guests bring with them. He suggests that most guests now arrive at their accommodation with their own devices and their own content and they want to use these devices during their stay, just as they do at home and at the office. He recommends that, “The key for hotels is to provide them with the infrastructure to achieve this quickly and easily.”

Bring your own content (legal or otherwise) brings with it its own set of problems. For a start, the accommodation needs an infrastructure in place to keep up with the vast Internet demand potential of their guests and most accommodation providers have only recently been ready to invest in improving their Internet quality and speed. There are also the legal implications to both guests and the accommodation provider for any illegal content that is downloaded.

There is no doubt that the guests who bring their own content continue to reduce the pay per view revenue pie for hotel operators. Some accommodation providers admit that the end return from pay per view movies is so low now that they don’t believe that continuing to offer PPV or VOD is worth the aggravation.

One thing remains true; guests are still smitten with their guest room TV and some accommodation providers still make the decision to provide PPV and VOD movies to ensure that they are providing suitable amenity levels for their guests and the star rating that they seek to attain. They do this to provide their guests with access to a range of the most current movies available. The bring your own content guests mainly use Netflix, Hulu, Amazon and other OTT video services to watch movies on their devices and these content providers are not be able to offer “current” movies like the ones that hospitality PPV providers can offer. This is due to deals with movie studios that have been agreed for at least the next decade and this situation is not about to change.

The Netflix, Hulu and Amazon streaming libraries are large but they are filled with older movies that are classified by the studios as “library” content. As an interesting aside hotels can offer the same library movie content, free to their guests by paying the studios a minimal monthly subscription fee for each room while charging guests an additional PPV amount for newer movies. This may be a great program for hotels to consider and may attract guests back to PPV.

There is much talk in the industry that “VOD is dead” but there is data to show that this is not necessarily true for every accommodation type. The fact that the Internet allows for easy access and viewing of “adult” content is not justification for a hotel to entirely drop PPV/VOD movies as a valued guest amenity. There are legal risks associated with consuming adult content from so-called free Internet sites. Guests have the right to sometimes choose to watch a movie that their partner would not necessarily enjoy or wish to see evidence of on a phone bill. The convenience and confidentiality of watching a legal adult movie in the privacy of a hotel room while traveling may be considered a welcome amenity and indeed a source of revenue for accommodation providers.

At the end of the day, every accommodation provider needs to make money and we all know that the best way to do this is to provide the services that your guests want and to ensure their complete satisfaction. Managers must select the capital investment most relevant to their individual guest’s needs. Investing in the wired and wireless infrastructure is now essential for all accommodations, so that they may deliver the Mbps per guest that is required to allow for their choices, perhaps this is to watch HD content on their devices. In addition to this, managers need to assess the PPV and VOD system improvements that are required and wanted by their guests. The challenge for managers here is the lack of consumer demand and poor economics balanced with what amenities their guests want and what might be attractive for them to use.

Providing the best in-room entertainment technology for your guests is not about achieving a quick revenue return. It is all about increasing guest satisfaction, meeting growing technological expectations, providing sought-after amenities and when that is done successfully, occupancy levels soar. No one can argue that this fails to make business sense.

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