We cannot think of an IFE show in recent years that we have not walked by the Stellar Entertainment booth to be met with a “G’day! Have a piece of candy,” by a tall silver-haired gentleman. It is precisely the way we will always remember Rob Lynch, Chairman of Stellar Entertainment… his presence and personal demeanor, which is partly what this Hot Topic is about. The other part is about how he and his wife, Helen, have made a success of their humble IFE content beginnings, some 40 years ago with Qantas. More importantly, it is a success story that needs retelling because, who else do you know that has 40 years in this crazy business and, still has their first customer!

When we first decided to do an interview with Stellar someone told us, “You don’t stay in business for 40 years without doing stuff right!” Accordingly, the Stellar Entertainment story begins in 1974 when Rob and his wife, Helen, answered a newspaper ad written to provide Qantas with in-flight programming. They won and later in 1979 they expanded into audio production and post-production services. Today Stellar Entertainment is a full Content Service Provider that offers IFE, in-flight audio production and post-production, music composition, content acquisition and more.

To start from the beginning, this past September we had the pleasure of interviewing the co-founder of Stellar Entertainment, the Australian-based Content Service Provider (CSP). The name Stellar is somewhat obvious, “With airplanes in the stars and inflight movies featuring stars, it was pretty obvious to us what our logo was going to be,” said Rob Lynch.

Stellar is one of the top three CSP in the IFE industry and they are well known in Asia, and today, they have some 75 employees who assist the airlines in delivering the right programming to passengers. Mr. Lynch told IFExpress that in no uncertain terms is he planning on retiring any time soon and it appears to us that his reasoning is based upon his enjoyment of the industry. He also seems to particularly enjoy the complex equipment and processes involved in the science: “Technology has really driven change in this business, more specifically over the past 6 – 7 years… and I love it! The digital age has changed our business and our world and it is one reason why I never seam to get tired of working with our airline partners.” As an example of his love of technology, we note that Stellar was an early adapter of the iPad and worked with BlueBox to provide service on JetStar. “It took 18 months to get the two big conglomerates to agree, but in the end, BlueBox designed the necessary software and we got the order, which included the iPad, and content from four Hollywood Studios!”

Rob went on to say, “In July we have been in this business for forty years. Stellar Entertainment was originally Helen Irvine & Associates and Qantas was the launch customer for our business in the in-flight entertainment industry and they have remained with us throughout our 40 years and in that time we have provide service to some 25 customers. In fact, I think we are the first CSP to reach a 40-year milestone with a customer!” However, Qantas is not Stellar’s only long-term client. “We have just renewed our contract with Malaysia and have been there with them for 25 years.”

While talking with Stellar at APEX we also spoke with Stellar CEO, Peter McLaughlin and he noted that content service providers really have two options: They can take a cookie cutter approach or choose a tailored route, the latter being Stellar’s choice. “We see the world as a partnership, not just a supplier.” We note that in Stellar’s case, their selection of partnerships obviously prove the longevity that they enjoy with their customers.

During our interview one of the requirements that we understood to be tantamount for success was to get the right people and train them properly, especially training about the importance of the customer. In fact, Stellar has an international mentoring system that helps pass on customer knowledge. “We want people who know how to listen and interpret what the customer (and market) wants and we teach them that every customer is different. We have a staff that has a broad spectrum of experience ranging from engineering, to content, to airline.” To quote Mr. Lynch, “We’ve stuck with our knitting. I’ve been in entertainment all my life and began this business as a radio announcer, but Stellar Entertainment from the very beginning has been a family business.” He went on, “We have a very low employee turnover rate. At the end of the day all you have are your people and your brand. So my recommendation to your readers is spend a lot of time taking care of them.”

To Lynch, content is king and their in-flight entertainment approach is that “it is all about content”. He noted that Stellar is always mindful of this mantra and therefore the company is willing to develop, generate, or purchase content whether it is art house movies, independent films, Hollywood movies, etc. “Stellar will purchase content from anyone. Today we go to extremes to get that day-to-day foreign content vs. the first run films.”

When we asked Rob how Stellar Entertainment has stayed in the business for so many decades he said, “You also have to expand and grow or your company will be done. To that end, today Stellar Entertainment owns 50% of Sky Victory in Mainland China with a staff of 10 in Beijing. You must be a multifaceted company. And, you have to have loyalty to your customer. I’ve had the same wife, the same lawyer, and the same accountant from the very beginning. Loyalty is the most important attribute for either an individual or a company. It maybe old fashioned, but the importance of loyalty cannot be diminished. Get to know your customer,” he said.

In closing we note that Stellar Entertainment is consistent, they understand the customer, they listen, they have market knowledge, and most importantly, they deliver on a promise. We cannot think of a better way to do business. One supposes that we should close with something prophetic, but for the life of us, we cannot think of anything after the preceding success story…  so for closers, we will just say, “G’Day, and have a piece of candy.”

Product Update: Thompson Aerospace’s CSUv2 server

One of our APEX reviews pointed out a real security-based, data transmission product rolled out by Thompson Aerospace at the show, the CSUv2 server that is the core of the 1Netv2 system. It is the highest level of secure off-aircraft (commercial), data communication we know of… all via Iridium or cellular towers. Thompson’s VP Business Development, Craig Jones told IFExpress: “Thompson Aerospace has the only patented Airborne Local Area Network and security for moving all non flight critical data between the aircraft and cloud. With all the recent cyber attacks aircraft data certainly need a high level of protection. The CSUv2 is the most powerful and secure server available in the market today. Managing all the data it represents a paradigm shift in creating the first true ecosystem for aircraft data.” When we looked into the solution we found that no one today is moving data between the airplane and the cloud. While there is a good amount being delivered to the ground, the issue is data availability (worldwide via Amazon Cloud) and security…and Thompson claims FIPS 3.

What data hacking is occurring to airline data is not known to IFExpress but if the airplane follows the ground experiences, why wait? Airlines have claimed the use of bad credit cards has ballooned and we have heard of bad card numbers as high as 20%. One airline even used cockpit communication check of high value card sales (What must that cost?). The Thompson solution uses worldwide Iridium connectivity from the plane (burst mode) to be applied to credit card sales and onboard purchases of all kinds via their new 2 MCU server. The Iridium transmitter is in the server and a small Iridium antenna is installed on the plane. Craig told IFExpress that handheld readers (wireless connections) or installed credit card readers would be connected to the server via WI-FI networks “Even wireless PEDs are a possible reading device,” Craig told us, “We have closed the loop!”

Craig mentioned that Electronic Flight Bag data is a potential, “as well as all Category C” data, he noted. They have even done lab testing for hacking and because the unit is controlled by security firmware in the machine, the data remains quite safe. “Hardware security is the secret, not software”, he told us. “We see flight tracking (when actuated as a backup), health monitoring, and flight recording data as potential airline uses,” he said.

We also thought the use of Amazon Cloud services as an interesting ground based storage solution. “The data is encrypted and the customer has can into the required information with a security key,” said Jones. “Further,” he noted, “airlines are looking at pilot performance data and navigation information so the airlines have the ability to review pilot performance data, since the server collects all data from the 717 and 429 buses as well. Additionally, airlines have told us that if they can prove how long an airplane was is in a location, they can reduce charges pertaining to domicile taxes, CO2 emission and navigation, fees”.

We have included a couple attachments here:  a press release, a product brief of the CSUv2 and product description.

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

Sydney, Australia | July 10, 2013– Stellar Entertainment Chairman Rob Lynch has announced the appointment of Peter McLaughlin to the position of CEO/Managing Director, effective immediately.
In making the announcement Mr. Lynch said, “I am delighted that
Peter has agreed to accept the position. He is an exceptional
Executive who knows how to expand the reach of the Stellar
Entertainment’s products and services. As CEO and Managing Director, Peter will further advance our position in the industry and accelerate innovation; he is the right person to lead Stellar Entertainment into a new era. Peter has vast experience in both the aviation industry and associated entertainment demands with a background of over 30 years with Qantas, where his Senior Executive roles covered Sales, Marketing, Customer Service, Product Development, and Regional Management. Furthermore, he has served on the Board of Directors of Stellar Entertainment since March 2012.”

Mr. McLaughlin said, “It is with great pride and a high sense of anticipation that I take on this role in Stellar; a company with an enviable 40 year record of delivering content to airlines and providing quality audio/visual production services, and I look forward to moving the company forward into its next 40 years.”

For more information, please contact rob.lynch@stellargroup.com or peter.mclaughlin@stellargroup.com