The author, Sam seog Ko, is a distinguished professor at the College of AI Convergence at Dongguk University and former commissioner of the Korea Communications Commission -- Ed.
The global streaming service Netflix is rapidly changing the media market. Especially during the corona pandemic, media experts' prediction that "streaming services will replace existing live broadcasts" has been confirmed as a fact beyond prediction.
Netflix is acting as a game changer, disrupting the existing media market order and reorganizing the media market. If Netflix was initially a complement to legacy media such as terrestrial broadcasting and cable television, it is now clearly identifying itself as a replacement.
As is well known, the core of Netflix's growth strategy is the CTS model. It's a mix of content (C), technology (T), and subscriptions (S). The company is fundamentally reshaping the media market by innovating its business model to acquire subscribers through a combination of original content and advanced technology.
Of the three factors that have driven Netflix's growth, technology has played the biggest role in making the "global media empire" it is today. From its personal recommendation system and purchase maximization strategy based on big data, to its open platform strategy and optimized UI/UX, to its original content creation, Netflix is undoubtedly the world's leading content company and the most powerful "media tech" company.
Advancements in media technology have dramatically changed not only the form of content, but also the way people consume media, and ultimately the makeup of the media market. In fact, it is no exaggeration to say that the history of media companies is the history of the development of media technology. From print to radio to TV, from black-and-white to color TV, from analog to digital broadcasting, media companies have risen and fallen. Media companies have been no exception to the "survival of the fittest" principle, where those who adapt to media technology advances survive and those who don't are driven out of the market.
The Consumer Electronics Show (CES), held every January in Las Vegas, U.S., attracts the world's attention as the "world's largest IT show" that introduces cutting-edge technologies related to media and content as well as information and communication. It is the first place to see cutting-edge media and content technologies, from those on the verge of commercialization to the unveiling of productized and serviced technologies. During CES2024, C Space, an exhibition space for media and content companies, was packed with exhibitors and visitors from around the world.
Trends in media and content are highlighted by on-site seminars in C Space and new products and technologies unveiled by exhibitors on the main show floor at the Las Vegas Convention Center (LVCC). Let's summarize some of the media and content trends we saw at CES2024 and what they mean for media and content companies and how to respond.
First, we saw the proliferation of artificial intelligence (AI) technologies, including generative AI, across all industries, including media and content. The Consumer Technology Association (CTA), which organizes CES, announced five key agendas for CES2024 before the event began: AI, mobility, food and ag tech, health and wellness tech, and sustainability and human security. But AI dominated the show, with CES2024 being described as "starting with AI and ending with AI.
The Digital Hollywood session, known for its seminars covering the latest issues in media and content, was the first to identify AI as a major keyword for the entertainment, media, and content industry in 2024. The day before CES2024 opened, Digital Hollywood's seminar, "2024: The AI Inflection Point - Explosive Growth in Entertainment, Internet, and Media," explored the impact of AI on the media and content industry, including specific examples. "The use of AI will have the biggest impact on content creation since the Internet in the 1990s," said one commentator.
Since the advent of gen AI in late 2022, the adoption and application of AI in the industry has entered a new phase. In particular, the media and content industry believes that a major barrier to the use of AI has been removed as a result of the Hollywood actors' and writers' strike last year, which resulted in the creation of "basic guidelines for the use of AI in film and television production. From scriptwriting to filming and post-production, the use of AI to improve efficiency is now an inevitable reality. Moreover, the influence of AI on media users' content selection and consumption is expected to grow even more in the future.
Second, it is worth noting the revival or rediscovery of the 'idiot box' TV, which is undergoing technological evolution led by domestic home appliance companies. TV sets are the core devices of smart home and home entertainment, the technology categories of CES. At CES2024, Samsung and LG, the global TV market leaders, showcased state-of-the-art TV sets equipped with high-performance AI.
Samsung Electronics, which presented 'AI for All' as the main theme of the exhibition, explained that the function of the TV is not limited to providing a content consumption experience, but will play a central role in the 'AI home device' as an 'Intelligence Hub' in the home that connects and controls all devices in the home. At the same time, he emphasized that it will lead to the 'AI screen era' that provides a new way of life beyond the existing smart TV.
LG Electronics, which held the 'LG World Premiere' for the media one day before the opening of CES2024, redefined AI as 'Affectionate Intelligence'. "AI is one of the most essential elements to bring customer experience to a whole new paradigm," said Joo Ju-Wan, CEO of LG Electronics. At CES2024, LG Electronics showcased the world's first wireless, transparent OLED TV, which drew a lot of attention from attendees. The CTA, which organizes CES, honored LG Electronics with the only TV innovation award. Forbes, an American business magazine, said, "LG Electronics took CES2024 by storm with its transparent OLED TV."
Third, Samsung and LG's competition in AI TV technology is linked to their content strategies to attract new consumers or lock-in existing ones. At CES2024, Samsung Electronics unveiled its 2024 version of Tizen OS Home, a TV platform with significant performance improvements. LG Electronics also announced that it will significantly expand the content of its smart TV platform, Web OS, and strengthen its services.
Both companies used the CES event to signal their intention to launch FAST, an ad supported streaming TV that responds to OTT. FAST is likely to be the biggest game changer in the media and content market this year. According to market research firm Digital TV Research, the global FAST market is expected to grow from $8 billion in 2023 to $17 billion in 2029.
Samsung Electronics has recently been actively expanding the reach of its Tizen platform TVs. The company offers a total of more than 2,500 channels in 24 countries around the world. The Samsung TV platform already includes the three major broadcasters and CJ ENM. Tizen OS enables customized content recommendations for each account registered on the TV. We've also added content discovery categories. In addition, the company announced plans to expand content partnerships and expand VOD services to the highest level in the industry.
LG's webOS, which was first launched in 2014, currently offers more than 3,500 channels in 28 countries around the world. LG's TV platform, 'LG Channel', was upgraded to 'LG Channel 3.0' in September last year. The biggest feature is that the app structure has been greatly improved by completely reorganizing the layout based on the UI/UX of existing OTT services. As an extension of these efforts, LG Electronics announced its vision to change its identity from a home appliance manufacturer to a true "media & entertainment platform company" centered on webOS. This is a declaration of intent to not only collaborate with existing media and content platforms, but to compete with them in earnest.
Since the pandemic, OTT has become a mainstream media platform at home and abroad. However, OTT subscription fees are increasing to the point where the new term "streamflation" has emerged, and users are becoming burdened. In this situation, FAST is becoming a trend in North America and Europe. With CES2024, the discussion on activating FAST led by consumer electronics and media companies will be in full swing in Korea.
Fourth, "How to provide immersive experiences to users" emerged as the top topic at CES2024, regardless of device and content. The use of cutting-edge technologies such as AI and metaverse in content creation and consumption will lead to fierce competition among operators to secure the leadership of content consumption platforms through immersive content creation and services, and ultimately to capture users' attention, time, and money.
A hot topic during CES2024 was the on- and off-floor competition between Netflix, the first company to exhibit at CES, and Apple, which did not participate in the event. Netflix, which had a booth in the LVCC, the main CES exhibition center, ran a trailer for its upcoming sci-fi drama Three Body Problem, which will be released in March, allowing users to put on an XR (extended reality) headset for a full-body immersive experience.
On the other hand, Apple, which did not attend CES, announced a day before the show opened (August 8) that it would unveil its MR (mixed reality) headset, Vision Pro, on the 2th Feb 2024. It was a media play to create a buzz and divert media attention from CES. The Vision Pro, which was teased last year, will feature an 8K ultra-high resolution display and "deliver an innovative and magical user interface," Apple said. Apple CEO Tim Cook declared that "the era of spatial computers (that can move between virtual and real) has arrived."
Today's media and content consumers are no longer satisfied with simply receiving content as a product or service. They need to experience it and feel it in order to value it, recognize it, and open their wallets. In the 'experience economy' theory, companies should provide valuable experiences to customers, and the experience itself will become a product. In this sense, CES2024, which has become the top topic of how to maximize user immersion by combining content and advanced technology, will be evaluated as an event that marks the beginning of a new experience economy.
Last but not least, CES2024 was also characterized by the proliferation of AI, with the 'sustainability and human security' agenda running through the entire event. CES2024's main theme, "All Together, All On," signifies the world's most innovative technologies coming together to solve humanity's challenges. The main theme was embodied in the core message of CES organizer CTA, which is to increase energy efficiency through technology, protect the environment, such as securing clean water, and enhance human sustainability, such as resilience, especially in response to climate change.
Efforts to solve common challenges such as the climate crisis and secure humanity's sustainability could be seen in the exhibition spaces of large companies. Samsung Electronics' 'Sustainability Zone' and experiential space, LG Electronics' 'Sustainable Home Solution', and SK Group's 'Net Zero World' experience zone emphasized that global big tech companies are responsible companies that work together to solve common problems and provide solutions. In fact, their role is growing and they are leading global discussions in this area.
Traditionally, agendas such as sustainability, human security, and inclusion and integration have been driven by media companies, especially public media, as a way of promoting socio-cultural values and fulfilling their public responsibility. However, in recent years, the ability to raise socio-cultural issues and set agendas has declined significantly as legacy media, such as terrestrial broadcasting and cable television, have fallen into crisis. It is necessary for policy makers and companies to deeply consider and respond to the reality of the shrinking role and influence of legacy media in the public agenda as well as their position in the media market.
The common thread among CES2024 exhibitors and attendees is that the use of advanced technologies such as AI and metaverse is not only inevitable in the media and content space, but also increasingly powerful. It is essential for media and content companies to utilize cutting-edge technologies to enhance their competitiveness and to increase the added value and differentiation of individual content.
However, blindly following or relying on technology is not a good solution. It is often said that the answers to problems that governments and companies need to solve are "on the ground". What we found at CES2024 is a simple truth: whether you are an IT company or a media and content company, the starting point for finding solutions to the challenges you face and the role you play is the user.
Accessing and utilizing cutting-edge technologies and services without an accurate understanding of user needs and behavioral analysis is like navigating the vast ocean without a compass. CES2024 clearly confirmed this.