{"id":35235,"date":"2018-11-13T19:05:37","date_gmt":"2018-11-14T00:05:37","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/ai-comes-to-the-magic-kingdom\/"},"modified":"2018-11-13T19:05:37","modified_gmt":"2018-11-14T00:05:37","slug":"ai-comes-to-the-magic-kingdom","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/ai-comes-to-the-magic-kingdom\/","title":{"rendered":"AI Comes to the Magic Kingdom"},"content":{"rendered":"

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[1]<\/a>. Armed with the technology and capability to cater to customers\u2019 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[2]<\/a>, no company is better positioned than Disney to use AI to take advantage of these secular trends.<\/p>\n

The Walt Disney company\u2019s portfolio includes media networks (Disney Channel, ABC,\u00a0ESPN), parks and resorts (Disney World, Disney Cruises), studio entertainment (Walt Disney Studios, Marvel) and, within the next year, streaming services (Disney+)[3]<\/a>. 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[4]<\/a>. Disney\u2019s 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.\u00a0The Company\u2019s 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.<\/p>\n

Management has already started to invest heavily to use AI to create these personalized experiences. Disney\u2019s short-term strategy revolves around Disney+, the Company\u2019s direct-to-consumer streaming service that will aim to take market share from Netflix\/Hulu[5]<\/a>. The company plans to use AI to predict consumers\u2019 demand for its existing franchises and help determine its next series of franchises.\u00a0While the company\u2019s 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[6]<\/a>. 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.<\/p>\n

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[7]<\/a>, 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.<\/p>\n

Figure 1: Disney uses AI to improve visuals in Finding Dory<\/em> movie<\/u><\/p>\n

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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[8]<\/a>. Disney\u2019s 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.<\/p>\n

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?<\/p>\n

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[1]<\/a> Uptin Saiidi, \u201cMillennials are prioritizing \u2018experiences\u2019 over stuff\u201d, CNBC<\/em>, (May 2016): accessed November 2018<\/p>\n

[2]<\/a> Bill Taylor, \u201cTo See the Future of Competition, Look at Netflix\u201d, 性视界 Business Review<\/em>, (July 2018): accessed November 2018<\/p>\n

[3]<\/a> S&P Capital IQ (2018). Disney Inc.: Public Company Profile<\/em>, accessed November 2018<\/p>\n

[4]<\/a> Netflix Amended Annual Report (10K), https:\/\/www.netflixinvestor.com\/financials\/sec-filings\/default.aspx, (February 2018): accessed November 2018<\/p>\n

[5]<\/a> Erich Schwartel, \u201cDisney Lays Out Its Plan to Fight Back Against Streaming Giants\u201d, The Wall Street Journal<\/em>, (August 2018): accessed November 2018<\/p>\n

[6]<\/a> Edgar Alan Rayo, \u201cArtificial Intelligence at Disney, Viacom, and Other Entertainment Giants\u201d TechEmergence<\/em>, (February 2018): accessed November 2019<\/p>\n

[7]<\/a> David Nield, \u201cDisney is Developing an AI That Can Judge What Makes For a Truly Great Story\u201d, ScienceAlert<\/em>,\u00a0 (February 2017): accessed November 2018<\/p>\n

[8]<\/a> Timothy Morey, Theodore Forbath, and Allison Schoop, \u201cCustomer Data: Designing for Transparency and Trust”,\u00a0性视界 Business Review<\/em>\u00a0 (May 2015): accessed November 2018<\/p>\n","protected":false},"excerpt":{"rendered":"

Artificial Intelligence has started to play a prominent role in the Media & Entertainment industry, enabling companies to use data to create customized content and user experiences. 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