Operators are standing by. Act now!
If I told you that there was a check for more than half a billion dollars waiting to be picked up each year, but you had to act now, would you think I was crazy? Maybe I’m pitching you on the Reader’s Digest sweepstakes? Or just pointing out a relatively untapped cable TV business services market that, for a limited time, can be yours?
If you selected the latter, you’re definitely reading CED! “HD Free to Guest” is a relatively new category in the hotel industry. Right now, large chains and independent hotels are implementing a conversion to free HDTV video services for their in-room guests. And they want to provide HD broadcast, basic and premium channel content now.
There has never been a better time – and, in fact, there may not be another time – for cable TV engineers, business sales teams and marketers to address this opportunity. Most analysts concur that we have, at most, a 24-month window of opportunity to capture this HD services conversion market.
Consider the math. There are more than 50,000 hotels in the U.S. with 4.7 million rooms, and even in this economy, an additional 200,000 are being added every year. With an average potential billing of $10 a room per month, our industry can realize a windfall of more than $565 million a year in gross revenues.
OK – so if you’ll agree with me that HDTV has become the premier revenue driver for commercial video services, we also have to ask ourselves, “What is the risk of not addressing or providing HD services to the hospitality industry?” How many hotels might you lose that are current customers if you can’t, or don’t, provide HD services today?
Before cable operators can embrace the opportunity, they need to get their arms around the technical and competitive dynamics unique to this market. Alliances can further cable’s reach across the entire spectrum of hospitality properties. As someone who has one leg in residential and the other in hospitality and enterprise, I know how critical this market is for our business.
Lodging properties are rapidly deploying flat-panel HD big screens to reclaim valuable room space, reduce energy expenditures, offer more attractive amenities and provide an overall higher-quality guest experience. Hotel concerns over guest tampering and theft of in-room equipment make delivering secure, manageable HD content without set-top boxes a key factor to selling into today’s hospitality market.
Deploying a reliable, in-room conditional access system is a requirement for all programming agreements. While we have yet to see a national programmer raise a major lawsuit over insufficient content protections provided around hotel room delivery, it may be litigation waiting to happen to the operator that can least afford it. Cable operators need to take necessary steps to ensure they are delivering content securely.
The most widely used CA system within hospitality today is LG Electronics’ Pro:Idiom. Enabling set-top-grade programming encryption at either the hotel or cable headend, it provides operators with the shortest time to market for cable-delivered, in-room HD video. Like any other technology product, Pro:Idiom requires some upfront operator investment to cover licensing, deployment and operation of specialized decryption and re-encryption hardware.
In time, its possible commercial implementation of tru2way could eliminate the need for operators to adopt alternative encryption methods for hospitality. But while a residential tru2way system appears imminent, no commercial-grade hospitality application is expected anytime soon.
Even with an effective security solution in place, most cable operators lack the single-source ability to provide revenue-generating video services for the hospitality industry. Highly specialized, interactive and real-time services like Guest VOD, gaming, integrated billing (aka “double post accounting”) and custom user interfaces require systems integration that is too complex and costly for operators to take on alone. Third-party integrators, like LodgeNet and others, represent ideal partners for operators in provisioning these unique “front-end” services.
Current market forces are providing attractive incentives for third-party integrators to closely align themselves with cable operators. Only local cable system engineers are able to provide on-call, round-the-clock tech support and maintenance at minimal cost to hotels and in-room service integrators, which is an unmatched human and technical resource. By establishing partnerships with third-party service providers, cable operators can also offer local hoteliers a single integration for a variety of software and hardware components.
Cox Las Vegas, for example, has proven the effectiveness of such bundling through its highly successful Guest Pay hospitality solution, which is currently servicing approximately 72,000 rooms across a majority of hotels up and down the Las Vegas Strip. Whether pursuing a new resort location or selling basic services into small B&Bs, cable operators need to provide a low-cost, integrated HD video solution at better price points than competitive packages.
Properties only make the transition to HD once, so hospitality’s urgent demand for linear HD television services won’t remain strong much longer. Like the TV ad says, operators are standing by. Act now!
Next month, Comcast’s executive vice president of national engineering
and technology operations, John Schanz, will write about the
power and scalability of an MSO network.
If you've got an idea for a column, send it to email@example.com