The media and entertainment landscape today has been galvanized by two driving forces: 1) an explosion of demand for original content and 2) a change in consumer preferences, particularly among millennials, valuing experiences over goods. Armed with the technology and capability to cater to customers’ media consumption according to their preferences, companies have invested heavily in Artificial Intelligence, turning large swaths of data into personalized content and carefully curated user experiences. While Netflix and Hulu have gained widespread publicity for incorporating machine learning into their core strategy early on, no company is better positioned than Disney to use AI to take advantage of these secular trends.
The Walt Disney company’s portfolio includes media networks (Disney Channel, ABC, ESPN), parks and resorts (Disney World, Disney Cruises), studio entertainment (Walt Disney Studios, Marvel) and, within the next year, streaming services (Disney+). While Netflix and Hulu have successfully used AI to learn and customize content, their data is only limited to in-home TV/movies and their customer base is skewed toward millennials and Gen Xers. Disney’s competitive advantage lies in the fact that it can more accurately predict the demands of a larger customer base. Disney uses its large portfolio identified above to see both the in-home and out-of-home preferences of a customer. The Company’s theme parks, movie franchises, TV shows, and hotels have allowed the company to acquire data on entire families and understand multiple aspects of their entertainment preferences, beyond just their content viewing habits. This allows Disney to create a more wholistic personalized experience for its customers.
Management has already started to invest heavily to use AI to create these personalized experiences. Disney’s short-term strategy revolves around Disney+, the Company’s direct-to-consumer streaming service that will aim to take market share from Netflix/Hulu. The company plans to use AI to predict consumers’ demand for its existing franchises and help determine its next series of franchises. While the company’s short-term strategy aims to catch-up with Netflix/Hulu, their long-term innovative use of AI will help separate them from the competition. For example, Disney now gives customers wristbands that act as identification, hotel keys, movie tickets, FastAccess (for theme parks) and even as a credit card. This enables Disney to know where their guests are, what they are doing, and what they need, enabling them to help deliver a personalized future experience. Not only does this use of big data help with product development, but it also facilitates process improvements. The Company now better understands where the bottlenecks are in their theme parks and hotels and can add staff in congested areas to improve overall throughput time and, consequently, customer experience.
Disney research has also started using AI to improve movie experiences, most recently collaborating with several Universities to analyze the facial reactions of movie-goers. The research team then attempts to find correlations between reactions (e.g. laughing, gasping) and movie scenes. The application of this will help the Company when conducting target audience analysis and group behavior, allowing Disney to more effectively produce content and market them to consumers. Within the actual product of these films, the Company is also using machine learning to accelerate and enhance animated renderings. As seen in Figure 1, the company used machining learning capabilities in the movie Finding Dory to help transform the initial graphic design (left) into a higher-quality image (right) in both a time and cost-effective manner.
Figure 1: Disney uses AI to improve visuals in Finding Dory movie
While AI has the potential to help Disney use its data to become a more effective player in media and entertainment industry, management must address a few additional issues. Firstly, Disney will need to maintain its strong culture as it shifts towards hiring more engineers and data scientists rather than candidates with traditional media/business/creative backgrounds. Furthermore, the Company will need to balance its ability to collect substantial amounts of data on its consumers with privacy concerns. Disney’s ability to create an improved, customized in-home and out-of-home comes could potentially cross the line into personal intrusion. Educating consumers as the benefits of this data collection could be a useful first step in addressing this problem.
Looking at the potential AI could have for Disney, there are a few criticial questions that come to mind. Firstly, will the benefits of using AI outweigh its substantial costs? In other words, does Disney really need to do this given its dominant market share and already strong grasp on its consumer demand? Furthermore, what are the implications for consumers in terms of privacy? Is the incremental benefit of customized experiences worth giving companies an all-access look into your personal life?
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