May 3, 2007 – TWO British handheld IFE providers – Mezzo and Phantom Media - continue to fight their corner in the face of the inevitable shakeout in an overcrowded marketplace.

At the top of the table, IMS is on a charge to wrest leadership from digEcor (Inflight Online yesterday). Panasonic, with its excellent but pricy eXpress, seems to have backed itself into a corner in which its likeliest prospects are existing embedded customers looking for service-recovery back-up. e.Digital, which played a part in developing the original paradigm-shifting digEplayer, has recovered from a series of messy entanglements to sell its eVU to Alitalia and Lufthansa, not to mention also supplying the equipment element of Mezzo’s turnkey service.

But Dublin-based AirVOD was absent from last month’s Aircraft Interiors show in Hamburg. The Dick Bertagna-led TranStar, which last year acquired a batch of ultra-mobile PCs (UMPCs) with a view to developing them for airline use, has gone quiet. And the Global AirWorks and Watermark offerings have been evident dead ducks for some time now.

In the meantime, London-based Mezzo and Phantom have acquired their first customers and had an upbeat tale to tell at last month’s Aircraft Interiors show in Hamburg.

Mezzo was formed by a team of former executives of British supermarket giant Tesco and is dedicated to providing the airline with a turnkey, end-to-end service capable of being turned into a significant source of revenues. Using a stock of around a thousand e.Digital eVUs, the company is currently contracted to Leeds-based low-cost Jet2, transatlantic premium-only carrier Silverjet and Scottish low-cost Flyglobespan.

In the pipeline, executive director Martin Cunnison told Inflight Online at Aircraft Interiors, are two more UK carriers and one in Canada. “All three are carrying out pilot programmes at the moment,” he said. “The British airlines are offering our service alongside old-fashioned distributed IFE, charging £10 per rental. The Canadian carrier charges C$10.”

Mezzo is focusing initially on the UK and Canada. “We’re not interested in a scattergun approach,” Cunnison said. “We want to properly understand advertising as a source of revenues, and we would prefer to show potential advertisers a mass of real activity in a couple of distinct geographical markets.”

Mezzo regards 100,000 users a month as “a magic number” for advertisers. “We have to show how many people are watching, as well as who’s watching what,” said Cunnison. “We get our data on quantities direct from the units, and qualitative information from passenger questionnaires.”

While advertising dollars have yet to materialise, Mezzo is beginning to see its own revenue stream from the two business models that it is offering to the airlines – retail and premium. Under the first, the airline makes the necessary real estate available on the aircraft and Mezzo initially gets all revenues minus 10 per cent for crew commissions. “Subsequently, at a revenue threshold defined in the contract, a revenue split will kick in,” said Cunnison. Under this arrangement Mezzo provides 35-50 handhelds per aircraft, “though we would consider loading up to a hundred on a long-haul service.”

The premium model, as offered to Silverjet, is simplicity itself – the parties agree a level of service and Mezzo receives a fee for providing it at every seat in the aircraft.

Mezzo refreshes Silverjet’s content once a month. The company recently added seven new staff for content acquisition work, according to Cunnison, and is partnered with UK-headquartered specialist Inflight Productions. “They’ve got the infrastructure and the relationships, and they’re getting us into the studios,” said Cunnison. “At the same time, we’ve gone through the MPAA security hoops in tandem with e.Digital.”

Phantom’s content acquisition capabilities are currently undergoing the acid test in business class on bmi’s new Heathrow-Moscow route, operated with Airbus A320s. When it launched the service last autumn the airline set out to offer a highly competitive business-class product. As well as 41in seat pitch – compared with BA’s 34in and Aeroflot’s 38in – the mix includes Phantom’s Bluebox Lite player with 7in touchscreen, offering films, television programmes, music and games, and surround-sound headsets.

Phantom originally entered the marketplace with a lightweight, wireless in-seat architecture but has since embraced the handheld faith, unveiling Bluebox Lite at the WAEA show last September. Now the company, along with its Bluebox Avionics subsidiary, is pursuing a two-track strategy designed to give airlines a well defined upgrade path from handhelds to a semi-embedded architecture.

Bluebox Lite is based on off-the-shelf ultra-mobile PC (UMPC) technology rather than the personal media player (PMP) starting points favoured by other providers. “It’s still the only UMPC-based device on the market, and its power gives us the ability to offer PC/Playstation-type gaming,” said Phantom managing director Rick Stuart. “It allows us work with some of the world’s biggest names in PC gaming, most of whom have not been able to offer their latest products to the IFE market because of the technical limitations of other systems.”

In Hamburg Phantom showed a new device called Bluebox Ultralite. With a 4in touchscreen, a practicable amount of memory, long-life battery and a software keyboard for passenger use, it is aimed at airlines requiring a lightweight service recovery device.

Phantom continues to develop its wireless in-seat architecture and plans soon to release details of an upgrade allowing it to deliver video meeting the 1080i high-definition specification to large bulkhead and overhead LCD screens. “We ignored this capability originally but it is now becoming an issue as CRT screens come to the end of their life,” said Stuart.

Despite the false start with wireless IFE in the 787, Boeing – and rival Airbus – remain interested in the technology. “We finally got the attention of both Airbus and Boeing, the latter being lost for words because of what we had we’d achieved with wireless,” said Stuart. “I think the key for them is the fact that we can take data and do public address with all the functionality of a wired system but without interacting with the existing multiplexer and so getting embroiled in certification issues.”