Generative AI in Consumer

Media & Internet

OC&C Perspectives

July 2023
GenAI is easily the most disruptive innovation in decades – shaking up
whole industries and transforming businesses’ right-to-win
Layers of GenAI impact

 Legacy barriers to entry / USPs will be reduced –

new entrants will be able to do more with less, &
Sustainable Competitive faster
Advantage  Some competitive advantages will remain –
unique IP, datasets & knowledge, network effects

 Consumer expectations will shift quickly – Gen AI

Propositions &
will raise the bar for product and cost differentiation
Business Models
 New customer needs will be fulfillable – new ‘art
of the possible’; opening or shifting pools of value
 Efficiency & effectiveness gains will be unlocked
Business Functions across a wide range of functions and processes
& Processes  Greater flexibility and scalability - lowering
OUR FOCUS planning risks

Shape of Jobs /  Revolutionising the shape of the labour force, and

Augmented the way we work
users  Not covered in this document

What do we mean by GenAI: • Applications that use a GenAI as key component in addition to narrow AI / ML
• Mainly Large Language Models (LLMs) of sufficient sophistication • Examples: BARD, ChatGPT, LLAMA, MidJourney, Runway, nVidia’s models
• Diffusion and other cross-modal generative models (video to animated 3D) • Most previous AI/ ML advances will be referred to as Narrow AI

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It is still maturing, especially for enterprise use cases – but within 18 months,
most of its challenges will be resolved
Generative AI Roadmap – Challenges and Resolutions

Not reliable enough

 GPT4 40% more Too slow
factual  Smaller models
Not good enough in
 OpenAI working on have shown great
asking follow up performance despite my context or needs
questions or saying few parameters rich I/O
“I don’t know”  OpenAI good at  Open source Too
 OpenAI estimates 18 optimising with pioneered expensive
approaches Not
months max every release  Latest GPT4 update
dramatically improve reduces resource recent enough
until good models  Combining GenAI with
will be free from narrow AI fuelling  GPT models will requirements  OpenAI, Bard and
hallucinations speed-hungry use enable  Economies of scale Bing retrieve live
cases support for images, (will) apply  Workaround highly
pdfs… recent needs

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We’ve seen disruption before: many verticals will see disruptive propositions
and business models, of which some will succeed
Models of Disruption

1 2 3 4
Type of
New Entrants Substitutes Leapfrog by
Competitive at Disruptive (with New (Dis)-Intermediation Asset-Light
Disruption Price Points Adoption Curves) Propositions

Historical
Media
Example

Impact  Long-tail first offering  Need solved  New player  Disruptively lower
targeting customers at differently by tech- augments product / risk allows competitor
disruptive price point enabled substitute; service; customers to react faster:
typically faster, better, prefer their offering or
 Spill-over into more – Scale up and down
cheaper experience
profitable or high – Enter new geos
potential segments  Early adopters, early  Customers
majority… typical internalise value – Cover peak
 Legacy becomes
adoption curve previously bought or demand
niche esp. high
(Rogers curve) licensed  Leading to higher
complexity customers
likely remain  Added benefits from  Some econ. of scale service availability
the substitute, i.e. requirements and ubiquity
integration, network decreased by GenAI
effects, gamification

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In consumer media, GenAI has multiple ways of being deployed across the
value chain…
GenAI: Examples of Potential Applications Across the Consumer Media Value Chain Non-exhaustive

Publishing,
Content Creation Distribution & Marketing &
Aggregation &
& Production Monetisation Discovery
Packaging

 Channel scheduling  Content optimisation:

 Script drafting  Ad personalisation:
 Customer service different modes of
 Rough cut video creating specific ads
 Automated delivery, eg social
editing for specific people
Reduce aggregation clips vs long form
Costs

 Content safety:
Detecting and  Improved
 Better music or TV
 Real-time translation flagging inappropriate marketplace
recommendations
of content for global content / making it matching
audiences age appropriate
Improve
Consumer
Offer  Revolution in search (see next page)

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… and search-dependent businesses will see radical changes in how they
drive and monetise traffic
Impact of Search Changes on Search-Dependent Incumbents

Content Publishers Search Providers Consumers

Critical Influence content Find and consume

Relevant discovery & Ingest content Return results content, goods &
Activities consumption services

From… Strong ability (via SEO, Rank via meta data + Adequate relevance;
On multiple sites
SEM) linkage headlines & links

Ranking change only

…To Weak / need for new High relevance;
comes with distinctive Within GenAI search
tools instream answers
new content

 SEO and SEM as we know it will  Lack of content attribution

Challenges for change  Difficulties in content monetisation
Incumbents  Hard to know how to drive traffic: black
box

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There are seven critical factors determining the scale of the challenge in
different types of consumer media business
Critical Factors Determining Scale of Challenge from GenAI

Search Competitive Customer Network Effects

Relationship to IP (& Other Systemic Drivers
Dependency Dynamics Satisfaction of Customer Stickiness*)

High Commoditised Fragmented; Many Scope to Step

Key to Distribution None
Content; No and/or Business Indistinguishable Change Value
Ownership Model Players Proposition
Eventual
Impact on Exclusive
Incumbent Distribution of
Distinctive Content
Revenues
Long-Term
Ownership of One-of- Monopoly or Needs Well Met;
Low None Oligopoly Limited Upside Many & Strong
a-Kind Content

GenAI Deployability

Non-Existent and Emerging Technology, Technology Already

Difficult to Conceive but Flawed Widely Used

Content Sourcing Method (Where Relevant)

3rd Party Aggregation
Entirely Manual Scraping API
Exists Today

12–24 Months Time Horizon of Impact Yesterday

*E.g. ecosystem benefits and customer investment in the service such as seller ratings or learning curve effects Generative AI in Consumer Media and Internet - OCC Perspectives_final | © OC&C Strategy Consultants 2023

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As such, depending on the type of business, Gen. AI represents anything
from a valuable productivity boost to an existential threat…
Gen AI risk, by Business Type
Eventual Impact on Incumbent Revenues

High Metasearch
Short Form Content
& MCNs

OCPs Traditional & Digital

Publishing
FTA TV Mktg.
Classifieds Srv. –
TV & Film Podcasting
Pay TV & Creative
Mid Production:
OTT
TV & Film
Non-Live Ticketing Production: Music Artists/
Animation Producers
Mktg. Srv – Buying Video Game
Social Platforms Studios &
Live TV/News Production Content Agg. Publishers
Cinema DSPs (Music)
Low (or Positive) Live Event Production Music Publishers /
Record Labels
Sports Clubs & Leagues
eSports

12–24 Months+ 6–12 Months Today Yesterday

Time Horizon of Impact

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… requiring different courses, and levels of urgency, of action

Urgency of Action, by Business Type

Fast Follow Actively Develop Act Now: Single Biggest Challenge

Eventual Impact on Incumbent Revenues

Capability
High Metasearch
Short Form
Content & MCNs

OCPs Traditional & Digital

Publishing
FTA TV Mktg.
Classifieds Srv. –
TV & Film Podcasting
Mid Pay TV & TV & Film Creative
Production:
OTT Ticketing Production: Music Artists/
Non-Live
Animation Producers
Mktg. Srv – Video Game
Social Platforms Buying Studios &
Live TV/News Production Content Agg. Publishers
Cinema DSPs (Music)
Low (or Positive) Live Event Production Music Publishers
/ Record Labels
Sports Clubs & Leagues Invest for
eSports
Watch & Learn Benefits

12–24 Months+ 6–12 Months Today Yesterday

Time Horizon of Impact

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It is critical to be front-footed – but evolutionary micro-use cases are not
enough! A first principles revision of your business position is needed
OC&C Support Simplified

Dynamic Perspective:
Rapid Diagnostic: Static Perspective:
Optimise for a Changed
Understand the Starting Point Optimise for Today
World
 What are the specific AI  How is gen AI shaping your market /  How will generative AI shape your
technologies which are emerging in competitive position? sector fundamentally?
the category/vertical? – Unmet/emerging needs of your
 What internal use cases are there
 How are these changing and for Gen AI to deliver better, faster, or customers?
disrupting customer behaviour? more cheaply? – New ‘art of the possible’?
 How are your competitors  What external-facing use cases can – Likely competitor moves /
responding to this? enable you to gain a competitive substitutes?
edge?
 Do you see any AI-enabled  What is your vision? Do you want to
substitutes already?  What defensive moves are be the AI-driven leader, or only keep
necessary to protect your position? up?
 How are your employees and
suppliers leveraging AI today?  What is the right tactical plan to  What are the key internal pain
Where is there further opportunity maximise economic benefit, and points which will limit growth / scale?
to evolve workflows and practices? minimise structural risks? Can GenAI address these?
 What is the best approach to  What assets & capabilities do you
implement these? (ie tools, need? How do you build them?
resources, capabilities, training)

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If you would like to discuss these topics further, please get in touch!

Kim Chua
Partner
Kim.Chua@occstrategy.com

Martin Schwarzmann
Partner
Martin.schwarzmann@occstrategy.com

Duncan Maud
Associate Partner
Duncan.Maud@occstrategy.com

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Back-up: We have considered how GenAI will affect the many players in the
consumer media ecosystem, across their value chains
Types of Business in Consumer Media NB. Size of box does not correspond to scale

Content Creation & Publishing, Aggregation Distribution &

Marketing & Discovery
Production & Packaging Monetisation
Podcasts Podcasting

NB marketing services, marketplaces and metasearch do not

Audio
Recorded Music Music Artists and Producers Music Pub. & Record Labels Digital Service Providers (DSPs)

Ticketing
Theatre &
Live Event Production

align to the media types outlined as rows

Concerts
Live Marketing Services
Sports Sports Clubs & Leagues FTA

Platform Aggregators (e.g. App Stores)

TV Pay TV
TV
TV & Film Production
Film Platforms OTT Cinema
Video
Short Form Video Short-Form Content Production Multichannel Networks (MCNs) Social Platforms
Marketplaces and
Video News Production TV Platforms (See Above)
News
Metasearch
Written Online
Magazines & Written Physical Classifieds
Text Traditional and Digital Publishing
Entertainment Distribution (ie
Retail/ OCPs
Trade Books
eCommerce)
Video Games Video Game Studios & Publishers Metasearch
Gaming
eSports eSports TV/Social Platforms (See Above)
Media
Technology
Media Tech AdTech & MarTech
Enablers
Analytics Analytics

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