By: Shubhangani Maheshwari, Associate Consultant, CMT, LTI

Consumption of home entertainment through internet-connected devices has grown exponentially, and Over The Top (OTT) platforms are changing the way video and audio content is received. Despite that, customer acquisition and retention is a big challenge for OTT players. Given that personalization, coupled with engaging content and a rich experience is the key criteria to garner loyalty, players are resorting AI to target the right customer at right time, and with right message.

AI is taking the highly competitive media and entertainment industry by storm. For the media industry, content is key and many of the broadcasting firms are focusing on original, personalized and customized content to stay ahead of the race. This has compelled providers to come up with different solutions to cater to the ever-evolving needs of the consumers.

Netflix is a classic example of the utilization of this differentiated methodology. It uses AI based algorithms to prioritize its original content based on user preferences and watching habits. The Netflix monetization model is subscription-based rather than the conventional ad-based model. Such business models further enhance the need for technologies like AI in delivering personalized user experience. This means that AI algorithms will be instrumental in content discovery, pricing and segmentation, based on user personas. Moreover, it will also help the platform owner to increase lifespan of audience.

Large OTT platform owners like Netflix and Hulu have gained the first-mover advantage, and have tremendous content diversity on their platform. AI enables audience preferences, and helps provide customized recommendations for a user’s personal playlist. The platform owners collect valuable first-party data which can be eventually utilized for restructuring programming strategy.

The domination of the OTT space by few firms such as, Netflix, Hulu and Amazon have put pressure on the consumers’ willingness to pay. However, with more players entering the market to claim the share of wallet, programming and marketing strategies require a higher level of precision to maximize engagement from trial to convert.

AI-based personalized recommendations and data-driven decision-making aid in crafting effective content acquisition strategies while acting as a catalyst to formulate marketing tactics for targeting new, returning and loyal viewers, thereby resulting in maximizing yield per subscriber.

With the data provided through AI, OTTs can optimize every aspect of the content ecosystem – determining when or why customer eyeballs tune out of certain programming. The more granular the information available, the more content can be adjusted to make video more relevant to viewing preferences. Today, with streaming video being considered at par with cable and satellite pay TV services, one can imagine that in the future there will be increase in advertising and subscription rates.

The ability to leverage AI to tailor content and brand experiences to individual audiences acts as a vehicle to provide prescriptive insights. For OTT platforms, this is just scratching the surface, and the opportunities to surpass traditional content platforms are incomparable.