Entertainment on Demand has been a fixture in the hotel guestroom for nearly as long as TVs. But in the face of streaming services, such as Netflix and Hulu, which guests can carry with them in their laptops or phones, how is Entertainment and Video on Demand faring?
For Scott Hansen, the director of guest technology for Marriott International, Entertainment on Demand is still a necessary service for hotel guests—but not in the traditional sense of buying through the TV and paying upon check out. Hotels view the option to offer in-room movies as necessary, however, improvements could be made to the experience, Hansen said.
“We are moving toward content access that guests would find in their own home,” Hansen said. “Inclusive basic features, such as an interactive program guide, are in the future.”
Hansen also said there is potential for opportunities to use digitized content through Video on Demand, such as cloud-based services that are hosted off property. As it stands, however, Hansen is focused on expanding Entertainment and Video on Demand as a service for hotel guests and not a main revenue driver.
“Could we work it out to where we get a good cut for every purchase or signup? Absolutely, but we still don’t see it as a significant opportunity,” Hansen said.
Oz Eleonora, chief revenue officer for interactive content and connectivity provider Sonifi Solutions, also said that Entertainment on Demand is trending toward increased interactivity in hotels. For Eleonora, this is part of a greater movement in hospitality to combine entertainment, information and service to create new scenarios for digital interaction between hotels and guests. That means more opportunities for hotels to connect with guests via technology, with one facet of that consisting of Entertainment on Demand.
“Entertainment is an element of this evolution, but is not necessarily the key driver,” Eleonora said. “Digital communication technology in hospitality, between the guest and hotel, is in a definition phase. Nobody knows what the final picture will be, but phones as room keys is one example, but designers are all experimenting and nobody knows what the final picture will look like.”
High-end and family properties largest consumers of EOD
By adapting to provide specific entertainment opportunities that are unobtainable by other means, Entertainment on Demand has been able to stay relevant and in the hotel space, especially in high-end and family properties. According to Oz Eleonora, chief revenue officer for Sonifi Solutions, families and high-end business hotels continue to be the largest consumers of Entertainment on Demand content, specifically for first-run movies still unavailable to consumers.
“Traditionally, hotels have been one step ahead of consumers in terms of technology, but now hotels are playing catch up to the home,” Eleonora said. “Entertainment on Demand is one way hotels can stay one step ahead, and guests are still buying movies.”
In fact, according to Eleonora, Sonifi earned more revenue per room in 2014 than in 2013. Entertainment on Demand as a whole has expanded to encompass more than just Video on Demand movie offerings, and guests now have more options when searching for in-room entertainment.
According to Eleonora, hotels and entertainment providers look at what guests are using in their homes and evolve to offer that in the guestroom. “The question isn’t who will and who won’t use Entertainment on Demand, but what format will they use it in and how much,” Eleonora said.
Scott Hansen, the director of guest technology for Marriott International, says the model is most sustainable in higher-end brands, such as Ritz-Carlton, as the price point can sometimes be prohibitive for guests at lower-end properties.
“Guests at resorts also spend more on entertainment than guests at other properties, and Entertainment on Demand can be successful there,” Hansen said.
OTTs an opportunity, not a challenge
The big question for Entertainment on Demand services is: What is your response to over the top (OTT) services like Netflix and Hulu? Oz Eleonora, chief revenue officer for Sonifi Solutions, says these OTTs offer an opportunity, not a challenge.
“Services like Netflix have educated consumers on the different ways to find entertainment, but there is no evidence that Netflix has taken a huge chunk of business from Entertainment on Demand,” Eleonora said. “There is a reason many people have subscriptions to both Netflix and a pay-per-view service. There are some offerings that are available or convenient on one that don’t make sense on the other.”
According to Eleonora, the biggest effect Netflix has had on Entertainment on Demand is through the user interface. Specifically, Eleonora cited companies such as Netflix and Apple, which focus on streamlined user interfaces that are easy to understand, and use that as a means to reach customers. He stressed that though many OTTs didn’t bring anything new content-wise to the marketplace initially, by having a clean user interface they were able to find a niche. “As a result, all providers are evolving their user interfaces,” he said. “Our job is to provide an interface that allows guests to connect with either the hotel or us. There needs to be different usage scenarios, and it is all about getting guests attached to the property and brand so they return to make future purchases.”
Scott Hansen, the director of guest technology for Marriott International, said the biggest concern with regard to OTTs is how hotels will monetize bandwidth. “Hotels can potentially charge for bandwidth for OTT use, ” Hansen said. “OTTs are more than just an entertainment package, they are tied to the Internet, so finding a way to include that in tiered packages may be one answer.”
“Our job is to provide an interface that allows guests to connect with either the hotel or us. There needs to be different usage scenarios, and it is all about getting guests attached to the property and brand so they return to make future purchases.”
Oz Eleonora, chief revenue officer, Sonifi Solutions