Friday, March 12, 2010

Mobile Adoption Changes the Revenue Model of TVs in Hotels and Resorts

Today’s post looks at a major effect that mobile adoption has had within hotels and resorts....
  • The Trend: Communication and content-serving technologies are on the brink of total ubiquity and portability. We’ve covered this several times in this blog -- basically everyone will have a smartphone within five years and everyone who would want a laptop already has one. (See this report if you require convincing of this point.)
     
  • The Effect: Hotels have been cut out as middlemen that provide access to content and communication. Such services are now provided directly to customers via wi-fi internet (for now) and mobile.
     
  • The Result: Hotels can no longer expect meaningful revenue streams from delivering or providing access to content and communication. Not even for internet access.
Here’s a real-life example: Several resorts will need to replace their ageing in-room televisions within the next 24 months. Unlike in the past, however, the new TVs will have almost no ROI if traditional models are pursued. Why? Because the bottom has fallen out of video on demand revenues. Nobody watches video on demand anymore, not even pornography, because everything that the guests want is already available for “free” via internet or DVDs that guests bring along and access via laptops.

The natural progression from dwindling VOD (video on demand) revenues was to deploy and charge for internet access. Customers demanded this service, and it certainly made sense from a long-term revenue perspective, but mobile is already siphoning off this stream, too. The current generation of mobile phones operate as internet access devices in their own right and enable tethering for laptop internet access, too. As with land-line telephones and TV content, hotels are about to be cut out of the “wi-fi as revenue stream," too.

But all is not lost. Here’s the opportunity: Hotels must define new ways to curate and access content for the specific hotel/resort experience. Specifically, TVs and their programming need to be rethought from the ground up to act as tools that enhance guests’ exploration and sharing of the resort (here are a few ideas from a mobile point of view). TVs will remain very valuable to guests (for now) because they improve the viewing experience from guests’ phones and laptops. That is, they improve guests' ability to view their own content, along with anything of interest via the internet or created for exploring the resort. Special thought should be given to helping guests to connect their devices to TVs and to how guests will be interacting with content. The days of simply viewing content are coming to an end, and resort-specific programming should be proactive on this front.

In the end, TVs will still generate revenue but via different services like facilitating service orders, offering games, and promoting the hotel through social media, as opposed to watching first run movies and some content that just isn't appropriate for home or office.