APEX ORIGINAL: Netflix Sweetens the Pot for Prospective Airline Partners
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Insight: Netflix can, and has, capitalized on the marketing clout of its award-winning original content to generate awareness of airline partners’ investments in next-generation Wi-Fi. But with no plans to cache content onboard, the question of who will pay for all that bandwidth remains.
You’d be forgiven for thinking that Netflix, which it boasts 100m+ monthly subscribers across over 109 countries, would not be inclined to work together with airlines, whose audiences are somewhat limited by comparison. However, Netflix’s VP Finance and Investor Relations, Spencer Wang, took to the stage at the Aviation Festival in London this week to prove otherwise. “By partnering together, we think we can create a win-win-win for Netflix, airlines and customers, because combining great internet connectivity with Netflix can improve passenger satisfaction,” said Wang, who will present at APEX EXPO later this month.
“We think we can create a win-win-win for Netflix, airlines and customers.” – Spencer Wang, Netflix
Business development partnerships between Netflix and airlines first began through a partnership with Virgin America. The company now also works with Aeromexico, Qantas and Virgin Australia. The Netflix business model means that, though passengers may have to pay to access a carrier’s connectivity solution, Netflix doesn’t charge its members extra to access the service in-flight, and non-members are welcome to sign up in flight for a 30-day free trial.
“Our in-flight program extends the benefits of a Netflix membership and drives more viewing, which helps our customer retention,” said Wang. “Delighting our members with in-flight accessibility is also good for our brand, and our airline partnerships build awareness of our original content. From our partners’ perspective in the airline industry, we generate excitement and awareness for their investment in next-generation Wi-Fi.”
Case in point: In 2016, Aeromexico flew a group of journalists from Mexico City to Cabo give them a chance to test the airline’s new Gogo 2Ku in-flight Wi-Fi technology. Using Netflix, they could stream season four of Orange is the New Black, which was released the same day.
When they reached Cabo, Aeromexico, Gogo and Netflix hosted a lunch for the journalists at Manta, one of infamous chef Enrique Olvera’s restaurants. Not only does Olvera design Aeromexico’s menus, he also stars in an episode of Chef’s Table – an original Netflix series – providing a tie-up between the companies. Netflix also teamed up with Aeromexico on a safety video.
Netflix is also doing its part to ensure a high-quality streaming experience for passengers. For example, Wang said that the company is working on more efficient mobile encodes, and that soon they’ll be able to deliver a DVD-quality stream to all personal devices at 250Kbps.
Furthermore, Netflix works with airlines to track the streaming experience. “We literally track the number of seconds between when a passenger hits the play button and when the video starts,” Wang confirmed. “We also track the average number of re-buffers per hour.”
Netflix has already seen solid engagement in-flight, with an average streaming time of over an hour for each active account and 20% of users having accessed the service in the air more than once.
However, there was an unspoken hint that these figures could be bigger, with Wang closing his presentation by strongly advocating affordable in-flight Wi-Fi, claiming it maximizes the benefit of an airline’s investment in IFC. “The more affordable it is, the more passengers can experience a great new service and the greater the satisfaction will be. If it’s priced too high, few passengers actually experience it, which defeats the whole purpose of upgrading your connectivity in the first place,” he concluded.
Register for APEX EXPO to attend Spencer Wang’s talk “Seamless Access to Content: Convergence of On-Ground & In-the-Air Experiences.”