Over-the-top services like Hulu and Netflix are starting to power up a completely different vertical from media and entertainment: the hospitality industry. The SVOD services are driving a sea change in many hotels’ marketing strategies and value-adds for consumers.
Case in point is Enseo, a vendor that sells IP technology packages to a number of hotel chains. The company is in the midst of a massive ramp-up in sales of its combination Wi-Fi/entertainment/managed services products – the Enseo Room Operating Center, installed in each of a hotel customer’s guest rooms, and its “personal area networks,” which include room-specific Wi-Fi and Bluetooth audio capabilities. The number of in-room entertainment packages being installed by Enseo skyrocketed from about 300 hotels at the end of 2015 to over 700 in October – driven largely by the system’s OTT video features that include Netflix, Hulu and YouTube.
“We’re deploying fast and furiously,” said Enseo CEO Vanessa Ogle. “There will be 10,000 new rooms installed with our Netflix-enabled system in October alone – that’s more than we installed in 2014 and half of 2015.”
It’s that Netflix feature that has hotel chains, and their guests, so interested. Guests are able to log in to the SVOD service using their personal account information and watch directly on the room’s TV set, rather than streaming over Wi-Fi on a personal device (although that’s still an option as well). When a guest checks out, the system resets, removing their login information. More importantly, guests don’t pay any extra for the ability to watch Netflix and other included OTT services over the installed system.
Enseo first began working with Netflix and Marriott to trial its eROC with Netflix features in 2014, testing it in six of the chain’s hotels.
“Netflix is absolutely … intent on preserving the best possible experience for their customers. … So they were very careful in how they measured this market,” Ogle said. “And Marriott was very careful too; they didn’t know if guests were going to like (the service).”
At first, Enseo was allowed only to install Netflix with room systems in Marriott properties. But after tests of the vendor’s system at Hilton and Omni properties, Netflix apparently liked the viewer measurement data it was receiving. “Netflix came back and said they were ready to expand our relationship. Our jaws hit the floor … when they told us they would let us put Netflix in any brand, any property, in the world,” Ogle said.
In August, Netflix extended its relationship with Enseo. While the vendor couldn’t reveal exact terms of the agreement, Ogle said that the deal has to do with access. Enseo is the only vendor of its kind with rights to distribute Netflix’s apps on any of its devices to any hotel in the world where Enseo has a contract and Netflix is available.
For hotels, Enseo acts as the equipment provider and installer of its in-room entertainment systems. After signing a contract with each individual hotel, which agrees to buy the equipment, Enseo installs a head-end server for the building and then places a set-top/set-back box in each hotel room. The vendor then personalizes the service to match a hotel’s branding and makes sure that in-room information and services unique to the property are included. Standard TV services are provided, as well as an on-demand movie service, and OTT services Netflix and Hulu are integrated into the Interactive Program Guide for guests to access using the TV remote.
Hotels also have access to some managed services through the systems – for example, if a set-back box is accidentally unplugged or disconnected, Enseo gets a signal and is able to notify the affected hotel, which can send a maintenance engineer to fix the problem with little or no disruption to guests.
OTT is a huge value-add for the branded, in-room guest experience, Ogle said. “People are not going to pay $20 for a movie in their hotel room anymore. So we knew, if we could find out how to bring their content into the hotel room and give them the best experience, that would be ideal.”
That idea is beginning to pay off for Enseo and for their hotel customers. According to Enseo’s viewing measurement tools, Netflix is among the top three channels watched “for every property, every demographic, in every type we tested – regardless of whether it was the Ritz Carlton in Naples or a small Courtyard hotel in Kansas. They all watch Netflix,” said Ogle.
Meantime, the amount of VOD movies purchased through hotel entertainment systems – which has always hovered at around 1.5 percent – has dipped lower, to about 1 percent, according to publicly available hotel room records, Ogle said.
Contrast that to OTT use in properties contracted with Enseo. Last year, “over 38 percent of guests in a hotel room logged in and put in their user info into Netflix to watch their own content. Now it’s over 40 percent, and in some markets it was over 50 percent. In one property it was over 85 percent. And the average dwell time was over an hour and a half,” said Ogle.
While Enseo doesn’t have insight into exactly what hotel guests watch, Ogle noted that while the content a family watches versus the type of content a business traveler watches could be very different, that 90-minute-plus dwell time is the same “regardless of age, race, socioeconomic status.”
Being able to give their guests additional OTT services at no extra cost – to either the guests or the hotels – is turning heads, attracting more than 30 hotel brands in 25 countries so far, Ogle concluded. “It's changing their business model tremendously.”