A Discussion with Peter McLaughlin: CEO/Managing Director Stellar Group

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Editors Note: We caught up with Mr. McLaughlin at an airport in the US recently and asked a few question about his company and the state of the IFE services industry.

Forty years ago, (1974) Rob and Helen Lynch started an inflight entertainment service provision service in Sydney Australia by answering an advert in a Sydney newspaper. They then competed for tailored passenger audio programming and won the Qantas Airways contract, one which they still provide today. Over the years they turned the small Stellar Entertainment business into one of the world’s premier shops for all types of entertainment services. They are now a full-service content provider, offering world-class IFE, video and audio production and post-production, music composition, content acquisition and much, more. With five offices around the world (including the US and Canada) and over 65 employees, they are truly a world-class programming provider. Their head office is located in Glebe, Sydney and specializes in inflight entertainment, including programming and management of Hollywood and international films, TV, music, games, digital books and magazines. Further, they provide encoding, metadata management, video and audio duplication and consulting services. From a IFE perspective, they provide audio and video entertainment, content acquisition and media sales. Having watched Stellar grow over the last 40 years one new product developments piqued our interest at a recent conference, particularly in the area of media sales. IFExpress talked to their new CEO/Managing Director, Peter McLaughlin about the new personal device-directed product, H2H Connect. Peter noted that Stellar’s media sales division is definitely one of the industry leaders in terms of experience and global reach. Further, they manage multiple Asia Pacific airline accounts for some 12 Asia Pacific airlines, and representing them around the world. Stellar has a significant presence in China as well. Stellar operate as ‘Sky Victory Technology’ a joint venture based in Beijing. It’s a CSP set up specifically to service China’s airlines exclusively. Currently, Sky Victory supplies content licensing and/or technical services to China Southern and China Eastern. Stellar also develops and supplies print advertisements, in magazines and television commercials, on traditional inflight screens and for the latest range of portable media players.” He went on to note that one of the airlines concerns is about their relationship with their guests/passengers is the ability to connect with their clients, not only on the plane, but over the entire travel experience. Their new service product Home2Hotel Connect is a Stellar in-house development that gives the airline a tool to keep their passengers engaged via PED content before, during, and after their trip. The app-based service, as Peter noted, “Puts the inflight entertainment choice on the device because, in the end, the control will always ends up where it should, in the passengers hands.”

IFExpress: If a passenger loads the H2H Connect App, what can it do?

Peter: “There is a bit about the service on our website but it essentially increases a way to connect to and engage passengers from the time they buy their ticket to when they arrive in their hotel – concierge service, video programming, audio programming, over 2000 digital publications that they can download and take with them, surveys, bookings, destination info, and shopping… H2H is a flexible tailored solution they can use throughout their journey, and it’s available for both iOS and Android devices.”

IFExpress: We gather, then, that you see IFE a bit differently. How do you help airlines get this “connection” with passengers?

Peter: ”We act as a consultancy to carriers in technology – one carrier wanted to connect streaming to passengers tablets and our folks came up with a solution. Another problem dealt with server software – we have another team of approximately 10 software experts that we use to help solve almost any software problem… apps, streaming, server issues, whatever. If airlines want to do something technically in the cabin, we can help… portable devices, social media, we help engage with the airline… If someone has a technical issue we can find a solution.”

IFExpress: Do airlines see IFE the way Stellar does?

Peter:IFE is about engaging… look at the way TV stations use Twitter, Instagram or Facebook. They are trying to capture an audience. Airlines just don’t have a lot of experience with that. When I was with Qantas we had a problem when they became a “business” and we had to refocus and re-drive the brand as an “airline”. The airlines have traditionally seen the IFE as a service, not as an integral part of the marketing mix.”

IFExpress: We gather that Stellar is pretty sold on this “engagement” software solution?

Peter: “Yes, we even have turned our interactive software capability into entertainment and communication for hospitals. In many ways the problem is similar to fliers, patients/guests are just tied to the hospital for a longer period of time.”

IFExpress: For readers that don’t know much about Stellar, can you tell us a bit more?

Peter: “We are based in Australia, but Stellar is a global company. We have dealt a lot in Asia, and the Pacific, Singapore, Kuala Lumpur; we even have facilities in Los Angeles that I visit as well. We have relationships with all the movie distributors in the world and almost 500 of the worldwide wholesalers. Further, Stellar has a significant presence in China as well. We operate as ‘Sky Victory Technology’ a joint venture based in Beijing. It’s a CSP set up specifically to service China’s airlines exclusively. Currently, Sky Victory supplies content licensing and technical services to China Southern and China Eastern. Since we do have international airline commitments, Stellar is so committed to the industry that we have a 24/7 technical service center hotline to help our customers anytime… I would also note that our Kuala Lumpur office is a significant Technical and Production facility servicing our Asian clients. We employee 20 Malaysians in that office and contribute significantly to the Malaysian economy.”

IFExpress: Does the fact that you are in the US visiting mean you are looking at this market?

Peter: “We are definitely looking at the US market as a future growth potential since we create a lot of our own content, we feel that Stellar has a bit of different spin on content production. We have a base in Los Angeles, as I mentioned, today and with the addition of US customers we would probably increase that office.”

IFExpress: What about all the competition out there, will that affect your business model?

Peter: There’s a lot of competition going on and a lot of consolidation in this industry… we don’t plan on going anywhere. Stellar Entertainment is in the business for the long haul.”

IFExpress: Doesn’t that mean that Stellar will have a lot of market challenges in the future?

Peter: “With respect to market challenges, we are experiencing a lot of competition and facing competitive consolidation. But in truth there are always market challenges. We have to adjust our model to ensure we remain competitive – we have come from a background of service but we are continually refining our product. We believe in providing service and value to airlines rather than using a cookie cutter approach. We are looking at ways to reduce costs for airlines and stay on top of passenger trends… we talk to passengers all the time. Connectivity is a good example: the financial hole all the connectivity has gone into is a lot bigger than the pile of money from it – those seatback phones are a good example.”

IFExpress: We keep hearing that the IFE content industry is changing, care to comment on it?

Peter: “There is a lot of change going on in the industry. There appears to be a drive by a certain group to control the content and it is not good for the airlines, or for other competitors. It will stifle creativity because they are beholding to a stockholder and the stock price, not the airline. If airlines are not careful they will find that they could end up being dictated to in the IFE space. Along with that there is a lot of technology happening… take connectivity, it has not taken a hold as much as they would have hoped. Two reasons – reliability and price. Further, on long haul flights, the demand doesn’t seem to be there. I note that in America there might be a law banning inflight telephone calls and America is a leader… it’s one we are all watching. Wireless streaming is what is getting traction at the moment and we have seen it succeed for a number of our clients and for Low cost carriers or new entrants with narrow-bodied aircraft or airlines with no imbedded IFE system it is gaining interest over connectivity. One thing is clear in the airline industry, airlines need/want to reduce cost and eliminating weight off an aircraft is a very attractive option.”

IFExpress: If you are talking about a content monopoly do you have any final thoughts?

Peter: “I have never met anyone that thinks monopolies are good, except of course, the monopoly themselves.”

You can reach Peter at peter.mcaughlin@stellargroup.com and you can check their website at www.stellargroup.com

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