This Tuesday afternoon, I was flying back from Costa Rica to San Francisco via Houston after an awesome vacation. When we got into the plane at Liberia airport, I was impressed with the fact that each seat was equipped with in-flight entertainment system.
Continental has a deal with DirectTV and as a result they offered a wide selection of channels as well as recently released movies. They did a great job at hooking he users with free 15 minutes of free programming to each user. The beginning of free 15 minutes was pretty seamless and to start with, one would'nt even realize that programming was free only for 15 minutes.
However soon I realized that I had only a few minutes remaining of free programming and I needed to pay $6.00 to continue 15 minutes.
I ended up not upgrading and as I looked around most people didn't upgrade either. I don't have exact stats but I'm willing to bet that almost 95% of people on that 3.5 hour flight from Liberia, Costa Rica to Houston didn't upgrade. I observed the exact same phenomenon repeat itself in my second flight from Houston to San Franciso.
So I started wondering what would I've done different if I was responsible for in-flight entertainment system P&L.
1. Price better. I think $6 for entertainment for one leg is a prohibitive price point. For movies, people could end up comparing the price with Netflix, BlockBuser, RedBox or just going to theatre. When it comes to non-movie programming, users would feel its quite a big pricey at that price point. Especially if you have a connecting flight, you will feel that for that price, its not even available for your entire trip. I'd price it for higher volumes with lower margins.
There are many users who won't mind paying $2 or $3 for a movie.
2. That brings me to my next point. I would price ala-carte. Let the user pay smaller but for things that they really want to consume. Lets say the user wants sports channel, let them watch that channel for $2 or $3.
3. Allow user to continue programming onto their connecting flight. For e.g. $3 for one flight or $5 for both flights for either a particular channel or specific kind of programming.
4. That brings up another point -bundling: The choices could be bundled better to consumer to align better with the fact that consumer has 3-4 hours max on a flight. A user could be allowed to choose between specific packages- movies/comedy/sports/news/travel etc.
5. Also for those users who still don't want to upgrade, there are many ways to engage the user with the screen and create new value for them as well as revenue for Continental. You have a captive user sitting in front of blank screen (because programming was turned off after 15 minutes as user didn't upgrade). What can be offered to him. Well to start with, local deals for his destination- restaurants/entertainment/activities/hotels/transportation. This is not hard because there are 100s of companies now aggregating local deals. If user could at least browse through those deals on that TV screen in front of him, its a win-win situation for everyone.
6. Sponsored content: There are a lot of companies who would love to put free local content based on destination in front of users supported by advertising and upsells. If I'm travelling to Alaska, you can bet that there are several local cruise,helicopter tour, glacier tour companies who would like me to learn about how fun it is and either pay continental for impressions or share revenue from upsells (if deals are offered)
7. Let the user pay for use by hour. This is just another way to price. I'm more likely to pay $1 per hour rather than $6 flat.
Just my thoughts. Would love the feedback!
-Navneet
