As four- and five-star hotels compete for guests with a wider array of entertainment options and are increasingly offering rooms with large screen high-def sets, the popularity of HD on-demand entertainment is opening up new opportunities for content suppliers and companies like NxTV, which has been expanding the amount of HD content it offers top hotels. NxTV clients include hotels owned by Four Seasons, Peninsula, Raffles, W Hotels, St. Regis, MGM Grand, Le Meridien, Marriott and Hyatt.
Richard Jenkins, senior vice president of content at NxTV, said over 80% of the 30,000 rooms they serve in the U.S. now have HD sets. “Even in the top hotels ten years ago you would find a $200 or $300 CRT TV in rooms,” he said. “But in the last year we’ve seen a huge migration away from cheap analogue sets as hotels have been buying top-end flat panel plasma or LCD sets.”
New luxury hotels are now built with state of the art networks and most existing four- and five-star hotels have rewired their rooms with high speed networks capable of supplying high-speed data, high-def programming and other entertainment services.
Over the last year, to meet the demand for more HD content, NxTV has gone back to its content suppliers to acquire HD rights for the IPTV services it offers hotels. In February, it concluded a deal with NBC Universal for HD rights to new films and TV series and over the past year or so has also acquired HD rights from Paramount, DreamWorks, Warner Bros. Lionsgate and HDNet.
Typically, movies become available for on-demand viewing in hotel rooms 45 days after their theatrical release and about 45 to 60 days before the DVD window. Films cost guests between $12.99 and $19.99, while TV series cost $5.99 to $7.99. Under the NBC Universal deal, viewers can access studio shows like The Office 24 hours after the network airing.
The business model is based on a revenue split between NxTV, the studios and the hotel, which takes a relatively small percentage.
“It increases their revenues but they primarily see it as a way of enhancing the guest experience,” Jenkins said. “If a guest is paying $600 a night for a room, you expect a flat panel TV. The people who are staying at the Four Seasons have all this technology at home and the last thing the hotels want is for the quest to experience a disconnect when they check into a room.”
NxTV receives and encodes the content from its network operations center and sends the content over the Internet to its media center within the hotel, where a video server holds about 1.2 terabytes of data, or more than 250 on-demand movies and TV shows that can be streamed to an NxTV set-top box in the room.
NxTV can also supply hotels with about 50 or 60 linear channels, of which 15 to 20 are in HD.
The hotels they work with typically have about 100 Megabits per second worth of bandwidth into the room, making it possible to delivery very high quality video. Currently Nat’s HD content is now encoded for 16:9 aspect ratio with MPEG-2 compression at 18 Mbs, which “is incredible quality,” Jenkins said.
This June NxTV will upgrade to MPEG-4 HD boxes, and in 2009, it will get rid of set-top boxes completely as it moves to cable card technology. That will dramatically reduce costs, as about 60% of the installation is the price of the box.
Looking forward, NxTV is also looking to work with pro sports networks and satellite providers DirecTV or Dish to supply packages of National Football League, National Basketball Association or Major League Baseball games in high-def on demand. No deals have been signed.