IFE: Global Eagle soars, Panasonic is laid low

Global Eagle Entertainment (GEE) is a specialist provider of aircraft-based In Flight Entertainment (IFE), of which more in a moment.  However, GEE said February 2nd that 2016 had been a record year for its live event telecasts to cruise ships on its MTN-TV channel.  MTN-TV delivered nearly 700 events and 2,627 hours of live televised sports, entertainment and specials in 2016. MTN-TV is currently available on 27 cruise lines and more than 135 ships.

But all might not be well in the IFE world. February 2nd also saw Panasonic Avionics confirm that it is subject to an investigation from the US Dept. of Justice and Securities & Exchange Commission into allegations made under the Foreign Corrupt Practices Act. Recently Panasonic Avionics’ CEO Paul Margis was removed from his role.

According to Giles Thorne, equity analyst at investment bank Jefferies, the news will not help the IFE industry. “Panasonic Avionics is the market share leader in IFE with about 70% market share of seat-back entertainment. It’s also amongst the most prominent providers of in-flight connectivity (IFC) – we understand that Panasonic has about 1,300 aircraft installed for IFC and about 2,200 in backlog making it comfortably the second largest IFC provider globally behind Gogo (2,629 aircraft) and well ahead of Global Eagle (776) and ViaSat (533). Note that Inmarsat doesn’t disclose its number of installed aircraft. PA has been aggressively pushing IFC growth as a counterpoint to the structural decline of IFE (and we have only to look at American Airlines’ recent decision not to install seat-back IFE on its massive new 737 Max fleet to see the direction of travel in [aircraft entertainment])”

He continues: “It’s well beyond our remit to second guess the direct implications of a DoJ / SEC investigation. But the indirect impact is worth commenting on. From the satcom perspective, we’re in a period of intense commercial activity as cabin connectivity re-sellers (PA, Gogo, Global Eagle) and satellite operators (Inmarsat and ViaSat) compete to take share in the largely greenfield global cabin connectivity market. This is a critical point in the cycle given decisions made now on service providers will likely set the direction of the market for the next 5-10 years. A DoJ / SEC investigation could stall PA’s commercial momentum.”

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