This commentary piece, co-authored by Jill Rosengard Hill, EVP, Magid, originally appeared on Hotel Executive.
The streaming wars have disrupted the entertainment industry in myriad ways, but this disruption has extended far into nearly every consumer-facing business in one way or another. For hoteliers, it means having to stay on top of continually evolving consumer attitudes and behaviors in an increasingly complex in-room entertainment landscape.
While Magid’s annual Video Entertainment Study found seventy-four percent (74%) of households still subscribe to pay TV, subscription video on demand services (SVOD) and ad-supported video on demand services (AVOD) are quickly gaining traction as cord cutting continues. SVOD has nearly usurped the reach of pay TV with seventy-three percent (73%) of households reporting they access entertainment content through SVOD. Yet, the same study found that many consumers are still looking for the helpful kind of systematic aggregation that has been established by pay TV providers.
It would be easy to simply offer guests the ability to log into their Amazon Prime Video, Netflix and Hulu accounts and access nearly 18,000 movies and 6,000 TV shows and consider the job done (numbers published by Reelgood for September 30, 2020). Platform providers like Comcast, Dish and Cox make it easy to do that. However, churn in, out, and between services is a serious issue in the entertainment industry. Nearly 1 in 5 consumers have cancelled a video service in the past year.
New AVOD offerings and niche streaming services with high consumer affinity seemingly come online weekly, looking to drive awareness with consumers and providing a challenge for hotels to keep up, aggregate and offer the best video options to their guests. In-room exposure to sample new services might be appealing to guests as well as provide an avenue to the services who are trying to recruit and retain new subscribers.
Beyond the basics like offering the ability to stream in-room, the streaming wars represent an even greater shift in the media landscape – the freedom of choice. The opportunity for hoteliers is to differentiate and enhance the customer experience through all forms of entertainment. Here are some key areas that present opportunity for hoteliers.
1. Separate Togetherness
For families, entertaining the kids is a big part of any hotel stay. Magid’s Video Entertainment Study found fourteen percent (14%) of consumers report that at least once per day, they’re in the same room with others but watching different video content on different screens or devices. Thirty-nine percent (39%) of consumers say they engage in this behavior at least once per week.
The idea of separate togetherness can be driven by a variety of behaviors and preferences– not just a desire to keep the kids busy. Forty-four percent (44%) of consumers binge watch at least once a week. Perhaps a group of travelers is divided. Two are looking to get their binge on while another wants to turn on the latest game they’ve been devouring. Hotels should consider floor layouts and amenities that allow families to be separate together.
2. The Growing Importance of In-Room Entertainment
Prior to the pandemic, the guest room was a major aspect of the hotel experience for leisure travelers, especially those traveling with families. As such, in-room entertainment was growing in both prominence and importance. While business travelers typically view the guest room as a place to stay and/or work, leisure travelers tend to spend more time in the room, particularly given the current pandemic. With business travel still on the decline, a larger portion of the guest population is traveling for a quick getaway. With guests often seeking to isolate themselves from fellow travelers, providing even more entertainment options in the guest room takes on even greater importance.
3. The Rise of Gaming
Gaming is a behavior most often ignored when it comes to in-room entertainment, but this is one of the single biggest opportunities within the entertainment landscape. With a majority (52%) of consumers now reporting they engage in some form of gaming activity, it’s official: gaming is mainstream. This has various implications on the hotel industry and revenue opportunities abound. Consider offering premium internet speeds and console package rentals or go big with special gaming-friendly rooms complete with high-end gaming chairs. Gamers represent a large, potentially underserved audience when it comes to packaging the right amenities to draw their attention and loyalty.
4. A Growing Love for Roku and Firestick Devices
According to TechCrunch, Amazon Fire TV had over 34 million active users, while Roku had over 29 million active users as of May 2019. These devices offer thousands of free movies and TV episodes. Guests can take their home device on the road, but they must go through a complicated setup procedure to get them to work on the television. Beyond the setup, guests may be concerned they could easily forget devices in the television USB port when they are ready to check out, leaving a potential opportunity for hotels to differentiate themselves. They may do so by making devices readily available in the guest rooms and set up for use with perhaps a few premium channels or services available for an additional charge for non-subscribers.
5. The Social-Short-Stream Generation(s)
In mid-2020, Millennials passed Boomers as the largest living generation in the U.S. With the oldest Millennials already well into their fourth decade and the oldest Gen Z cohort now coming of age, hotels would be wise to keep a close watch on their entertainment preferences and how they differ from past generations.
Two key areas where these generations deviate:
a. Social media and short-form video dominance. Not only do younger demos engage in this behavior more, they prefer it. They can be found watching videos on YouTube, Tik Tok, Facebook or Instagram (with variations within generations) on their phone rather than your typical in-room entertainment delivered via television.
b. Half of consumers watch live streaming video at least once a week. That number rises to 66% for 18-to-34-year-olds. Again – not your typical in-room entertainment.
6. Music and Fitness on Demand
Seventy-one percent (71%) of consumers use a music streaming service. While hoteliers are sensitive to the potential of creating disturbances for other guests, IoT connected rooms with smaller built-in speakers throughout could have appeal, particularly in destinations that attract younger travelers.
With the advent of the fitness-on-demand craze that’s been driven even further into the culture by coronavirus-closed gyms and fitness centers, hotels will need to consider new avenues for engaging athletes, weekend warriors, and business travelers who simply want to keep up a workout routine in their rooms.
7. Entertainment for Purchase
With theaters still mostly or entirely closed across the country, Magid’s Video Entertainment Study found consumers are much more open to renting newly released movies. One-in-four say they are willing to rent a newly released movie for $19.95 with one-in-five willing to pay $10 more – and another one-in-five willing to pay $20 more for a total of $39.95. People still clamor for new releases, despite having literally thousands of movies available through streaming services.
The study also found many opportunities for other ancillary activities ripe for partnerships – food delivery, online watch parties, and more. For hoteliers, this could open the door for a wide variety of partnership opportunities, especially for family ‘staycation’ getaways.
8. Staying Connected
While the idea of staying connected is woven throughout the many opportunity areas previously outlined, it certainly deserves its own category. As more live streaming services become available, local news is another area garnering interest from consumers. For many travelers, streaming content provides an entirely new avenue of staying connected to what is happening in their local community in a more intimate and informative way.
When it comes to staying connected, privacy is an extremely relevant topic, particularly when considering consumer concerns. The safeguards taken to protect your guest’s confidential information is vital to the health of your hotel’s brand. That means your internet/Wi-Fi, in-room entertainment, IoT partner services, and the equipment you deploy matters immensely. A relatively underutilized option is to offer casting from guests’ own devices that allows them to access their existing entertainment services without having to enter any passwords. If you are considering offering premium internet packages for increased entertainment demands, you may also consider making private hot spots available that provide a greater sense of security.
Finally, it is no longer sufficient to have the right channels or platforms. It is equally important to choose an interface with a high user experience rating.
We recognize these suggestions create more potential investments required of hoteliers. For years, hotel owner-operators have sought to keep up with internet demands. As the number of devices guests brought to their rooms increased, so did the strain on existing internet systems. Just as hotel owners invested in upgrades, demand grew even further. Satisfaction with online connections became frustrating for both guests and ownership.
Now, with the other upgrades that hotels are required to make to health and safety protocols, there may not be an appetite to also upgrade the capability for streaming entertainment content. With the combination of lower rates and occupancy, along with higher costs, the challenge of making these investments is obvious. However, streaming content demand is here to stay, even after the pandemic. At some point, these investments will need to be made. If you can make them now, and capture a greater share of a diminished market, it seems prudent to do so.