How one OTT service provider is using AI to grow its customer base
By integrating Alchera’s artificial intelligence technology with its OTT search tool, Korea Telecom is redefining customer experience in the internet streaming market.
What happens when a superior competitor enters a competitive market? According to the catfish effect, weaker competitors are motivated to innovate.
That’s what happened in 2016 when Netflix jumped into Korea’s over-the-top (OTT) market. With big brand name recognition, Netflix quickly established itself as a major player. Between 2016 and 2018, annual revenue grew to $223 million USD in 2018. By 2019, Nextflix was a big fish in the OTT pond. It had 1.8 million customers or 18% of all OTT subscriptions.
Korea Telecom (KT) was a small fish. Though the country’s largest broadband service provider and second-largest mobile carrier, it was third among the country’s three domestic OTT companies. Add YouTube and Netflix to the mix and KT’s market position looked even more modest.
Hoping to energize its fortunes and capture a piece of the rapidly expanding OTT market, KT made a commitment to innovation two years after Netflix burst onto the scene. KT created product bundles with cutting edge features aimed at a youthful segment with an appetite for hi-tech experiences.
Branded as Seezn, KT’s new OTT service for home and 5G mobile phones offered:
- ultra high definition (UHD) video content
- optimized sound for sports, music, and movies
- AI-powered search
KT had the resources to build a platform and acquire content. AI technology with big data processing capabilities was the missing component.
That’s when KT partnered with Alchera.
Alchera created two unique search tools. The first recommends content based on the customer’s current emotional state. Here’s how it works.
The customer downloads KT’s Seezn app, which ties into the phone’s camera. After taking a selfie, the image is sent to a database and processed by Alchera’s algorithm. The algorithm analyzes the facial image and returns an emotional score based on predefined parameters. The system currently has six possible emotional outcomes, including joy, anger, and sadness.
The emotional score then passes through data sets which include the user’s personal history along with the date, time, and weather. Based on predefined filters, the system creates video and music recommendations. The entire process – from selfie to recommendations – takes about two seconds.
AI and big data are used to curate song lists on Genie, KT’s music service. Each day, Genie publishes a personalized 30-song playlist based on the listening patterns of people who listen to similar music.
Two months after launching Seezn in November 2019, KT subscriptions jumped 29%, from 2.1 to 2.7 million. By early 2020, KT was the fourth largest OTT service provider, behind YouTube (35 million users), a Korean company called Wavve (4 million users), and Netflix (3.5 million users).
Industry-wide, Korea’s OTT segment has undergone fantastic changes since Netflix entered the market. Sign up rates exploded, local players inked content deals, and service providers funded original programming.
Over the long term, content might not be enough to sustain growth. Today’s tech-savvy subscribers consume experiences, which includes search tools that anticipate individual preferences.
Service providers have also learned the value of big data. In that regard, KT is on the leading edge of the catfish effect. Using AI as a search tool enhances the customer experience today and in the future.
“AI-based personalized recommendations and data-driven decision making don’t just inform content acquisition strategies, but also marketing tactics for targeting new, returning and loyal viewers to maximize subscriber yield.” – Multichannel News
What is the catfish effect?
It’s a theory that suggests a strong competitor causes weak players to improve. The idea comes from Norwegian trawlers fishing for sardines. Live sardines earned higher market prices but were hard to keep fresh on deep-sea boats. According to lore, a captain threw a catfish into a holding tank. Though some sardines were eaten, most stayed alive by swimming. The result was a plentiful supply of fresh sardines when the boat reached shore.
We’re a technology startup from South Korea. Our domain is artificial intelligence (AI) and augmented reality (AR). Supported by a team of experts in computer vision, deep learning, graphics, data science, and software engineering, we solve problems.
Since 2016, Alchera has empowered businesses to launch products, improve efficiencies, and bring the power of visual AI to their organization.