As media and entertainment companies battle it out for a piece of the streaming pie, artificial intelligence is playing an increasingly important role in separating winners and losers.
Digital transformation has reshaped the media and entertainment space as streaming video and other digital offerings have come to dominate the industry. In late 2019, The New York Times described streaming as a once-in-a-generation “seismic shift” for the entertainment industry, a revolution cemented by legacy media giants like Disney, NBCUniversal, and WarnerMedia finally bowing to market pressures to get on board.
Disney+, WarnerMedia’s HBO Max, and NBCUniversal’s Peacock signal the start of a new era, one in which streaming’s nexus may well move from Silicon Valley to Hollywood. Of course, streaming has already established its dominance in other forms of media, as well. For music and podcasts, streaming services accounted for 80% of all revenue in 2019, with Apple, Spotify, and Amazon Prime competing for industry leadership.
Inevitably, as streaming markets have become increasingly crowded, competition has become more intense, and because streaming services are direct-to-consumer platforms, establishing a competitive advantage in this space involves impressing the general public. In today’s digital landscape, this is often accomplished through personalization.
The Rise of Personalization
No longer the stuff of science fiction or a marketing ploy for tech companies, personalization is now an expectation. Three-quarters of consumers are frustrated when website content isn’t personalized, 72% of consumers say they only engage with personalized messaging, and 83% of consumers are willing to share their personal information with companies in exchange for a more personalized experience. Providing a meaningful, personalized experience to tens of thousands of consumers requires achieving personalization at scale — and personalization at scale all but demands leveraging artificial intelligence (AI).
Unsurprisingly, then, spending on AI in the U.S. media and entertainment industry is expected to reach over $1.86 billion by 2025, up from $329 million in 2019. Here’s how leading media and entertainment companies are embracing AI to provide consumers with more streamlined, personalized experiences:
1. Personalized Recommendations
The reigning king of streaming, Netflix rose to the top of the industry largely due to timing, but it has stayed there largely because of its carefully tailored user recommendations. One of Netflix’s most well-known features is the “Recommended For You” section, which offers users suggestions for their next watch based on what they have viewed in the past. Netflix even goes so far as to display a customized thumbnail image based on what has previously appealed to the user.
Similarly, music streaming leader Spotify is known for its “Discover Weekly” playlists, which offer listeners a 30-track playlist of songs they’ve never listened to but are likely to enjoy. Additionally, Spotify offers an assortment of “Daily Mix” playlists made up of a combination of listeners’ known favorites and new recommendations. Spotify’s knack for not just offering recommendations but reliably pairing listeners with music they’ll truly enjoy is considered a major advantage over its competitors.
Viewing and listening recommendations are now a standard feature for most leading streaming platforms, meaning each tool’s accuracy may ultimately play a large role in determining which streaming platforms sink or swim in an increasingly crowded marketplace. Platforms that offer users the most accurate recommendations most consistently will enjoy more engaged and loyal customers.
2. Improved Streaming Quality
The increasing adoption of streaming platforms has created a range of technical challenges when it comes to providing customers with seamless viewing experiences. Providing a high-quality streaming experience to millions of viewers requires not only a massive amount of bandwidth, but careful personalization.
Netflix, for example, drew from a massive database of network and device conditions to create a machine learning algorithm that predicts both network strength and user behavior to reduce buffering time. When a Netflix user experiences a drop in image quality midway through viewing a piece of content — an experience with which many of us are familiar — this is typically the result of the algorithm’s decision to reduce quality rather than rebuffer in the face of decreased network bandwidth.
Netflix also leverages predictive caching to improve the streaming experience. The streaming company is so good at predicting what its users are likely to watch next that it will cache parts of its predicted picks while users are still scrolling, enabling video to start playing faster and at a higher quality if and when the user presses play.
3. Consumer-Driven Content
Artificial intelligence isn’t just helping pair consumers with existing content they’d enjoy; it’s also helping media and entertainment companies create new content for consumers. For example, in March 2019, Warner Music Group signed the world’s first-ever record deal with an algorithm. The algorithm was built by the startup Endel, which creates personalized audio tracks aimed at boosting the listener’s mood or productivity in real time.
Meanwhile, in Hollywood, Warner Bros. entered into a partnership with AI company Cinelytic in January 2020. Cinelytic leverages AI and data analytics to guide decision-making about how, when, and where films should be released based on how consumers in various markets have historically responded to variables like the film’s genre, subject matter, or stars.
Notably, neither of these technology companies is trying to compete with artists. As Cinelytic Founder Tobias Quiesser tells The Hollywood Reporter, “What [AI] is good at is crunching numbers and breaking down huge data sets and showing patterns that would not be visible to humans. But for creative decision-making, you still need experience and gut instinct.”
A Forward-Looking Competitive Advantage
Moving forward, media and entertainment organizations’ ability to beat out the competition is likely to depend on two things: the quality of the content they offer and the quality of the user experience they’ve created. Optimizing both will almost certainly require leveraging artificial intelligence.
Media and entertainment companies that have yet to utilize AI to its full potential can benefit from partnering with an experienced technology consultancy like SEI. SEI’s experienced consultants have a proven track record of success helping media and entertainment companies transform their operations to compete in the digital age. If you’re interested in learning how SEI can help your organization leverage AI, reach out today.