Entertainment is big business, and behind the scenes of our top streaming services exists an industry on the frontlines of innovation, pushing the boundaries of what’s possible in media and battling daily against content piracy, account sharing, and fragmented audiences that threaten the long-term sustainability of their platforms. While early pioneers like Netflix, Hulu, and Amazon Prime continue to top the market in terms of overall popularity, the past five years have seen an explosion in competition targeting niche audiences like horror fans (Shudder, Screambox) and Anglophiles (BritBox, Acorn TV). From unlimited anime on Crunchyroll to nonstop drama on Lifetime Movie Club, there’s something for everyone, and that’s part of the problem.
There are currently more than 200 streaming services, and it’s become a nonstop game of cat and mouse between providers and viewers – providers hoping to increase subscriptions and secure revenue, viewers hoping to explore content and skirt subscription fees. Recent surveys have found that 38% of Americans pay for a subscription and give other people access, while 55% use a service they don’t pay for at all. This rampant mooching adds up, with some analysts estimating streaming services lost over $2.3 billion in 2022 membership revenue due to password sharing alone.
Those sorts of losses get a lot of attention, and the media & entertainment (M&E) industry has turned to digital modernization to help transform traditional operational frameworks, enhance customer experiences, and ultimately, seal revenue leaks.
88% of Americans now subscribe to at least one streaming service, making them target-rich environments for artificial intelligence (AI) that feeds on large quantities of data. As digital natives, streaming services within the M&E industry have been using AI for years, especially for increased personalization. Thanks to AI-enabled solutions like predictive analytics, service providers can learn from customer behavior, identify patterns to curate offerings, and make recommendations to increase viewer satisfaction. If you’ve ever found yourself happily binging a series you’d never heard of, you have AI to thank.
In recent years, M&E companies and their external technology partners have used AI in increasingly creative ways, notably in back-end processes (like billing, accounting, and payments) to monitor performance, identify bottlenecks, and better understand underlying issues contributing to instability.
Given the success of these pursuits in recent years, M&E leaders are now turning the power of AI towards securing their interests, boosting ROI, and building more resilient architecture for the future.
Here are three additional ways that streaming services can benefit from the AI revolution taking place in M&E:
Sharing log-ins/passwords was once seen as the jaywalking of the streaming industry – everyone did it, and few were held accountable. Those days are long gone, and M&E companies have invested a lot to protect their investment in premium content, relying on AI to track device IDs and monitor IP addresses to determine where log-ins occur. The tech can deduce which is your home location (or you can set it yourself) and then monitor account activity to identify and gently curb unauthorized sharing practices.
It’s been a sensitive issue and Netflix took the brunt of the public outcry when they began limiting accounts in 2023, but users have since come around to the practice. Subscribers have even increased, as the ubiquity of streaming content makes it hard to unsubscribe altogether and some streaming platforms now offer ad-supported models for more price-sensitive consumers.
The role of a Chief Technology Officer (CTO) has expanded and evolved to keep pace with the rapid innovation of the past decade. It’s a tough job because success is often measured in consistent ROI. Even the most tech-forward CTOs must always strive to align their digital transformation efforts with business outcomes, focusing on optimizing costs and maximizing value. That’s where AI plays an outsized role, helping CTOs run initiatives with smaller teams to free up resources for broader tech investments.
Some recent job postings at top streaming companies foretell where the industry is headed, with titles like: “Director of Product, Generative AI & Search,” “Senior AI Engineer,” and “Vice President of Generative AI Production Technology.” It’s clear streaming companies see the value in AI, but they’re also investing time in understanding how the technology can be deployed ethically. Given the complexity of these new environments, many M&E companies now rely on external technology partners to help guide them through the time-intensive process of retrofitting their operations with AI capabilities. Streaming services are looking to the future; now is the time to prepare.
A big question for M&E companies is whether the efficiencies of AI balance out the energy it requires to power its capabilities. Training and operating the large language models (LLMs) that enable AI is quite energy intensive, requiring much more electricity than traditional data center activities. That’s why the AI industry is deeply involved in strategies for building and maintaining more energy-efficient data centers (e.g. domain-specific accelerators, relocating data centers closer to power sources, etc.) and investing in renewable energy sources (i.e. solar, wind, hydropower, etc.).
Growing pains are common in such a burgeoning field, and M&E industry leaders have chipped in to do their part, finding creative ways to use AI to increase the sustainability of their own operations, including things like: reducing travel to locations by relying on AI-generated set building, using AI to improve file compression to make streaming faster and less energy-intensive, and better post-production analysis of carbon emissions to help improve future investments. Ultimately, everyone benefits from M&E’s continued commitment to sustainability – steaming services will optimize/futureproof operations, data centers will get more efficient, and customers will enjoy a better viewing experience.
According to McKinsey, AI is poised to contribute as much as $448 billion in added value to the overall M&E industry, innovating functions from marketing & sales to supply chain management. Content will always be king for streaming services, but those with an eye to the future must also invest in building enduring platforms that continue to grow revenue over the long haul. The M&E industry has always been resilient, continuously evolving and adapting to new technologies and customer demands. This is just another episode, and customers should be excited to watch what happens next.
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