Advantages and Challenges of Delivering a Networked Hospitality Experience Part 2: In-room Entertainment

There seems to be a consensus that aside from mobility, Cloud computing is the technology trend at the forefront of transforming the way businesses operate. It can help making operations more efficient, enables faster time to market, delivers higher quality and lowers cost – items that are on top of the of every hotelier’s concern list. Some hotel technologies and operations are more suitable than others to be placed in the Cloud, such as PMS systems. But is the Cloud ready for in-room entertainment?

The answer is yes - and no, if digital TV comes into play. Delivering digital TV through the Cloud requires at least 1Mbps per room, making it prohibitively expensive in the majority of countries today. On top of that, most countries require providers to acquire a broadcast licence to deliver TV services through the Cloud, which particularly in Asia can be fraught with red tape.

So for hotels who want to provide a high quality, digital TV viewing experience, a walled garden IPTV solution remains the only option for the foreseeable future.

Ready for the Cloud: Hotels with
bigger emphasis on
 individualised guest services

TV aside though, delivering other features and guest entertainment services through the Cloud (including VOD), is a viable alternative for hotels, provided certain criteria are met. 

The beauty about Cloud-delivered entertainment services is of course is that hotels can do away with the expenses of having server equipment on their premises. And if hotels have invested in the latest SmartTVs, they also don’t need an STB in the room, provided the in-room entertainment provider integrates with the major SmartTV providers like Samsung and LG. In this scenario, the service could even be provided on a monthly subscription basis, which reduces hotels’ upfront CAPEX and allows more flexibility in terms of service updates. In this scenario TV remains analog but even then, delivery at an acceptable quality requires reasonable and reliable bandwidth to the hotel.

However, in some locations and for some hotel brands which are content with analog TV and have a bigger emphasis on individualised guest services, using the Cloud or a hybrid, minimum equipment solution may well suffice. The question is: why aren’t more hotels taking advantage of delivering their services through the Cloud?

The main reason is that it is always hard to change established ecosystems and the people that have been trained within it. And Cloud technology is particularly disruptive, which goes against the grain of the established IT ecosystems in hotels and elsewhere.

An analogy is the Windows monopoly that took years for Apple to crack with ground shifting business models and technologies. Similarly, the Cloud has been around for a while in some shape or form, mainly known simply as the Internet. But the mobile/connectivity world we live in today has created one of those inflection points where the simple Internet has transformed itself into the Cloud, with the business models and technology advances to match. This hopefully will also result in the next generation of IT managers embracing Cloud technology at a much quicker pace.

It won’t happen overnight as hotel IT managers have to deal with legacy systems and architectural constraints, among other things. But they should certainly be ready and look for ways to take advantage of the Cloud in every which way possible – including in-room entertainment.

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South Korea’s Hotel Boom - a Boon for In-Room Entertainment?

South Korea seems to be on everyone’s lips these days. There’s a monumental ‘Korean Wave’ sweeping us towards its shores, fueled by the ongoing popularity of South Korean entertainment and culture, specifically in the form of K-Pop and television drama.

The Seoul Metropolitan Government has reported that there are only 29,000 hotel rooms in the country to accommodate the estimated 10.8 million visitors to flock to the country this year – a shortfall of nearly 15,000 rooms. Keen to get a slice of the action, local and international hotel chains are making a beeline to invest in the country in what the Korean Herald in a recent article described as a ‘Gold Digger’ mentality. 

Add to that the fact that South Korea will do the final switch from analogue to digital television at the end of this year and you have an industry at an inflection point. On the one hand there’s the massive influx of new hotel properties to alleviate the room shortfall and on the other there are the existing hotels that are faced with new competition and also have to address how to adapt to the post-analogue world come 4.00am on 31 December (unless they have already adapted to the ATSC digital standard of course). 

  

So no wonder plenty of suppliers -- including in-room entertainment specialists such as my company -- are eagerly putting plans in place to participate. The problem is that, unlike ‘mature’ hospitality markets in the region such as Hong Kong and Singapore, there seems to be a very different perception among South Korean hoteliers of the value of things such as in-room entertainment systems. The prevailing view is that in-room entertainment systems should be either provided free of charge to the hotel or provided through financing by the vendor. This stems largely from the market being ‘spoiled’ by legacy providers who more often than not threw in in-room entertainment for free because they subsidised it through HSIA revenues.

In the age of analogue entertainment and internet being a chargeable item in hotels this made perfect sense. However, with the onset of the age of HD, smart devices and ubiquity of internet access that is expected to be provided for free, the game for what guests expect by way of in-room entertainment has shifted quite dramatically.

Talking to our local partners during my recent trip to Seoul, most middle management in hotels seem understand the intrinsic value of sophisticated in-room entertainment systems; it’s the top management that, apparently, still needs to be convinced. This is not surprising: while the middle management is usually more heavily exposed to guest complaints about substandard entertainment options, the top management holds the purse strings and finds it harder to justify an investment whose returns are seemingly less tangible.

Next-gen in-room entertainment offers branding and revPar opps

But here is the crux: the next generation in-room entertainment systems are not only about superior picture quality, but offer a much wider opportunity for hotels to benefit from both tangible and intangible returns. As I have written about in another blog, in-room systems today offer hotels great opportunities on many levels, from creating  positive brand relationships and long lasting loyalty through hotel-specific features, to streamlining backroom operations through TV-based housekeeping, to increasing revPAR through interactive promotion of hotel services and eCommerce features. 

So new hotel or old, the current ‘gold digging’ environment combined with the upcoming switchover from analogue to digital presents a great opportunity for South Korean hoteliers to propel their properties to the forefront of guest room sophistication and reap the benefits with increased brand value as well as a boost to the bottom line.

Facebook and the $100 Billion Dollar Question

There seemed to be a collective breath holding going earlier this week when it was reported that Facebook is apparently planning an IPO in the first half of next year to the tune of $10 billion, which would value the company a cool $100 billion. If successful, it would also be the largest tech IPO in history, but merely the fourth largest ever; still not bad for a company that wasn’t even around 8 years ago. 

Some of the reports couldn’t resist the “Dr Evil” reference, that line in the first Austin Powers movie where the numeracy challenged Dr Evil proposes to hold the world ransom for $100 billion. However, compared with the amounts that we are bombarded with on a regular basis these days, a mere $100 billion seems like a piggy bank of small change. Greece is threatening to buckle under a 340 billion Euro debt, the US government bailing out the financial community to the tune of $700 billion in 2008, and of course now facing a $15 trillion deficit as at November 17, 2011 (take that Dr Evil!). These types of numbers seem to be rolling off everyone’s tongue as if discussing the latest petrol prices. While many lay people may still gasp in awe at the likely Facebook valuation, my guess is that very few are able to take it beyond its abstract meaning of “a whole lot of money”. 

So let’s just quickly clarify what we are actually dealing with. Wallstats.com puts the cost of waging 48 hours of war in Iraq and Afghanistan at one billion dollars, which puts the $15 trillion US-deficit somewhat in perspective. The site usdebt.kleptocracy.us on the other hand, does a great visualization of various astronomic amounts, of which the One Billion Dollar one looks like this:

So now that we have established beyond doubt that we are talking about more money than you can reasonably carry away in a bank robbery, let’s go back to Dr Evil and look at the ransom part. There is actually a bit of irony in there that I find much more irresistible than the dollar amount itself. 

The vast amount of intimate information Facebook now has available about its users worldwide is such that if it was a government agency, it would pose an internal security risk for any country that has a sizeable Facebook user community (which excludes, notably, China). So with vast amounts of sensitive intelligence and deep pockets, you may indeed be forgiven to think that there is something slightly creepy going on. But maybe that’s because (disclosure) I don’t do Facebook. 

The notion that you give your personal data (and then some) voluntarily over to a commercial corporation, whose intentions about what it plans to do with it are less than clear, and then go out to buy into the company once it goes IPO sounds almost like buying back what you have given for free. But who knows, maybe Facebook won’t get the $10 billion IPO, or even if, maybe it won’t hold its value after the launch which in the current economic climate is quite possible. Just this week it was reported that companies that listed in the US this year had lost an average of 10% of their value after debuting. And that includes coupon-seller Groupon, whose shares have now fallen below their initial price, as well as music streaming site Pandora Media.

There will no doubt be a great deal of analysis and debate about whether Facebook is actually worth $100 billion. But whichever way it goes, the IPO (if it is true) sends a powerful signal to the industry. It implies that the company, just like other entertainment and communications technology companies is  poised to continue to thrive, no matter whether there’s a deadlock in the Senate or the Eurozone breaks up. Quite to the contrary. It seems that the more dire the circumstances, the more we collectively flee into the haven of entertainment, even if it is just for a short while. The record 42 billion online videos watched by US citizens in October this year speak for themselves, and so do the reports that despite the general doom and gloom telcos are set to profit from stable growth in the coming years.  On the whole, it looks like it’s statistically proven that we love to be entertained when we are happy and we also spend money to be entertained when we are sad.

Of course, as the entertainment sector bucks the trend and becomes the shining example of successin an otherwise faltering economy, things will get a lot more competitive for a share of the spoils.  Many other operators, currently on the industry fringes may just muscle their way in. For companies already in the entertainment and communications technology space this means just one thing: innovate or perish.

The Limits of Using Icons as a Visual Vocabulary

It was just the other day when we looked at coming up with a new set of Icons for our in-room entertainment Graphic User Interface that it occurred to us that while the various technology devices that anchor our lives these days allow us to communicate ever more visually, our collective reference points are more and more fragmented. From the old Egyptians and their hieroglyphs to today’s Apps, mankind has always sought to use pictorial descriptions to communicate. When you study for your drivers licence, you have to memorise the look and meaning of as many road signs as possible in order to pass the test. In order to make it easier, the road authorities around the world came up with pictorial representations of the various signs which over the years were adopted more or less universally in the developed world. But while learning the meaning of these signs came with a clear incentive – i.e. learn them or don’t drive – the visual identifiers and pictorials that guide so many other things in life evolved much more haphazardly.

The windows approach to computing was probably a major milestone for making icons a centre piece of way finding in our daily lives. In the early days of the desktop computing age, these icons were necessarily simple, but not only because of the graphic restrictions, but because of the need for a simple conduit into a complex world that would be understood by the most technically inept person. The artist who created the icons for the original Mac desktop and applications believed that icons should work like traffic signs and convey information without distracting the user. So born was the ‘folder’ icon with the little stub poking out that looked exactly like the ones stacked in everyone’s office desk, alongside the ‘recycle bin’ that looked like Oscar the Grouch’s trash can, the pair of scissors that signaled that you were about to ‘cut’ something and a paperclip that meant you were ‘attaching’ a document. Then, when the internet came of age, the depiction of a neat little house with a chimney wasn’t an advertisement for a furniture shop anymore, but the icon that signified the homepage of an internet site. All of this is of course common sense and has largely managed to align most of us along one common path of iconography that enables us to recognise that a shopping cart icon means “check out” a pad lock means “security” and an umbrella has something to do with the weather.

However, what happens when the corresponding physical object has no longer any distinguishing features that are so important for being both instantly identifiable and minimally distracting? Or what if the activity it is meant to represent becomes too complex for a clear pictorial representation? A house is a house is a house is a home – ok. But take out your mobile phone and look at the symbols on the buttons for making a call and ending a call. It’s the old fashioned banana-shaped head set that was part of the home phone before it was replaced with a very different looking hands free set or a mobile phone. Or try saving something on your computer and you’ll see that this action to this date is symbolized by a floppy disc, something that joined the technology scrap heap more than 15 years ago as other portable storage options such as CD-ROM took over.

But it was when I was sitting with my graphics team to ponder a new set of icons for the User Interface of our in-room entertainment system that it really hit me how little the pictorial representation of our world has changed in the face of the relentless evolution of our communications world. How better to represent TV channels than a box with the old rabbit ears on top? And nothing says “movie” better and clearer than the old 35mm movie reel, even though today’s box offices smashes are more likely a combination of digital video and CGI. Music channels are much better represented by a full blown stereo headset rather than the now more prevalent micro earpieces. And what says better “you’ve got mail” than a good old fashioned letter envelope? It will be interesting to see if these ‘old’ pictorials finally disappear simply because a new generation of users has no longer any memory of them ever being in existence. But what will replace them? The problem is that as the physical part of human interaction and communication gets more complex, so by necessity does the iconography. What was once a clearly defined activity, such as “I watch TV”, has morphed into “I Skype my friend on my connected TV”. “I read the news in the paper” is now more likely to be “I read the news on my smart phone”. The question is at what point finding a universal visual vocabulary for ever complex activities becomes futile. Some icons will move into the abstract space where the meaning is instilled through what is commonly known as branding. We can already see this with Facebook, Skype and Twitter, whose logos have effectively turned into icons describing an activity.

But what about the so-called ‘way finding’ icons? At the risk of sounding a little nostalgic, my bet is that while newspapers may go completely digital and TV’s become multifunctional communication devices, their original form and purpose will live on in the world of icons for generations to come. And as for our User interface? In the end we decided to do a combo of words and icons. Nothing beats a good compromise.  

The Pros and Cons of using Apple products in hotels

While using Apple devices at the consumer facing front end is a smart choice for hotels, using them at the back end is expensive and potentially risky

The trouble with a new technology all of a sudden gaining momentum is that there is a lot of enthusiasm and eagerness that lets many people race ahead without assessing the pros and cons first. This is particularly so when it involves popular gadgets such as Apple’s iPhone and iPad, which have recently graduated from personal communication and entertainment devices to all round marketing device for hotels.  

Apple is of course a unique success story and we stand in awe in front of Steve Jobs who not only came back to turn the company around after years in the wilderness, but moved on to single handedly revolutionise the way we consume media today. Apple consumer products come with a beautiful, minimalistic design, superior functionality and a seemingly impenetrable cool factor that is streets ahead of its competitors. But aside from the iPod, Pad and Phone, Apple also sells computer software and hardware which includes the Mac Mini, a sub-desktop computer and server which enjoys popularity for its small form factor and light weight compared to regular desktop PCs and has become specifically popular for use as a server in a small network and, due to its sleek design, as a home theater solution.

But things get blurred when it comes to using Apple products in a commercial environment, for example to power the in-room entertainment services in a hotel. In fact, the understandable aim to catch the rays from the All-Things-Apple sun could put hotels in danger of falling into an IT trap that will, at best, cost them a lot of money to implement and at worst severely limit its possibilities to migrate to future technologies. Aside from limiting itself and its travelers to Apple products and updates for the coming years, the investment hotels have to fork out for an all-Apple hotel is staggering. Given the strict regulation Apple imposes on distributor, reseller and end user pricing, there isn’t much room for Systems Integrators or hotels to receive a better discount. So equipping all rooms in a 300-key hotel plus headend with MacMinis is quite an investment, even if the integrator gets a good discount of the list price of roughly US$700 a piece. The cost of the MacMini of course reflects that this is a piece of hardware that was primarily designed as a consumer device, and not for commercial use.  

Don’t get me wrong: I think Apple devices are extremely useful in a service environment such as a hotel, particularly at the consumer facing front end. The ‘Second Screen’ entertainment solution my company offers for hotels is tremendously popular as it lets customers stream live TV and VoD content on their iPad or iPhone wherever they are in the hotel, access facilities and room service info and use it as a navigation tool to facilitate eCommerce applications. But you don’t have to have a MacMini in each room to facilitate these services; there are more robust options in the market that are also easily upgradeable and do not limit accessibility to a certain brand. And they are considerably cheaper, probably as much as 60% compared to an all-Apple solution. Count on top of that the direct and indirect cost incurred by the ongoing maintenance of a PC/MAC in a hotel room and you end up with a price that is way beyond what’s justifiable. 

If significant cost savings are not enough, consider latest figures showing that popularity of Android-based tablets has risen from 13% to 46% in the 6 months from November 2010 to April 2011 which indicates that the race to tablet dominance is far from decided. Just remember that just 2 short years ago the tablet market did not exist and you can literally hear the next ‘big thing’ snapping at every gadget’s feet. Another point to note is Connected TVs, which will significantly impact the hotel industry in the medium to long term and will further erode the window of opportunity for a MacMini solution in a commercial environment like a hotel, at least at the current price point.

Hotels have to seriously look at the consequences of exposing themselves to these potential risks. So rather than following short lived trends and marketing gains, they should carefully assess the cost and long term viability of their IT investment to ensure they can implement changes and additions to their core services easily and with minimal investment.