Viasat turned in another quarter of revenue growth, with government and mobility services delivering strong performances. Integration of Inmarsat delivered a boost on that front, but also significant cost headwinds. Higher interest payments associated with the debt used for the acquisition, as well as one-time integration costs, expanded the company’s loss for the quarter.
Looking forward, the company’s growth depends on executing on payload deployments, of course. That’s been a rough go over the past year. Additionally, the company is focused on helping airlines better deliver the services to passengers, a shift from the technical to a more consultative role.
Evolving the concept of inflight connectivity
In addition to bringing more aircraft online, CEO Mark Dankberg acknowledges that “airlines don’t really get any credit from their passengers if they don’t use the connectivity system.” He still believes video is the driving factor there, which is bandwidth-intensive and comes with two challenges: Can the provider deliver and can the airline afford it?
Coverage and capacity are relatively straightforward to deal with, though the payload failures and launch delays aren’t helping Viasat’s position. Evolving the monetization strategies within an airline are more complex, but Dankberg believes Viasat is well situated:
We’ve been increasingly successful at is helping the airlines monetize that engagement. Different airlines have different strategies for monetizing it. But if if they don’t monetize it, and they just add more costs, that doesn’t work for a lot of airlines. So the idea of building the increasing supply of bandwidth and the increasing engagement into a business model that works for each airline, and that’s one of the main things that we’ve been focused on.
Advertising is part of that strategy, but for a decade now companies have been talking about improved advertising as the key, and none have delivered on that promise. Viasat sees a “very broad range of monetization opportunities” around sponsorships, promotions, and other concepts. Putting a common set of ads on every flight into the host city on Super Bowl weekend is advertising, of course (and something Viasat did in 2023). But it is a much higher value proposition as it delivers outsized value to the advertiser, and comes with a better revenue model for the airlines.
Moreover, Viasat posits that the monetization strategy necessarily must differ for different airlines. As Dankberg explains, “[A] lot of this is really around how how they brand and monetize their operations in general, and the partners that they use, which often are associated with their route structure, and the values that their brand conveys.”
Which, of course, does not mean that passenger-paid service packages are dead. But the monetization strategy is directly tied to a willingness for the airline to take some risk. Those with more creative and aggressive digital marketing teams are more likely to see better revenues from the IFC installation, whether it is paid by passengers or not.
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