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AI and OTT Shaping Media's Future

General Report January 11, 2025
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TABLE OF CONTENTS

  1. Summary
  2. AI Advancements and Their Implications
  3. OTT Content Market Dynamics
  4. Media Commerce and Evolving Consumer Behavior
  5. Regulatory and Industry Challenges
  6. Conclusion

1. Summary

  • Examining the profound influence of AI technologies and OTT expansion, this report delves into the evolving dynamics of media and content industries projected to 2025. Key areas of focus include the rapid advancements in AI applications, particularly through AI agents in healthcare and consumer services, and their implications for productivity and personalized experiences. OTT platforms, noted for their direct-to-consumer content model, are highlighted as crucial disruptors in the entertainment sector. As consumer behaviors shift and market dynamics evolve, the demand for personalized content and seamless integration of media commerce is set to grow. Notably, AI's role in improving efficiencies and offering sophisticated decision-making tools is juxtaposed against skepticism, emphasizing the need for transparent governance to foster trust among users. Meanwhile, OTT growth is illustrated by the proliferation of K-content and strategic partnerships, which are reshaping competitive market landscapes. Regulatory challenges remain a significant barrier, with network usage fees and international competition. However, these barriers also present opportunities for strategic adaptation within the industry.

2. AI Advancements and Their Implications

  • 2-1. Emergence of AI Agents in Daily Life

  • AI agents are emerging as advanced technologies surpassing traditional chatbots, equipped with autonomous decision-making and learning systems. These 'killer apps' are set to redefine personal and professional productivity. Resembling enhanced virtual assistants, these digital agents can act independently based on user habits and preferences while respecting personal privacy. They can assist with various tasks such as travel bookings, appointment adjustments, and identifying the best retail offers. According to research and consulting firm Gartner, adopting AI agents allows companies to automate customer service, streamline workflows, and enable faster data-driven decision-making, thereby reallocating human resources to strategic and creative tasks for competitive advantage.

  • 2-2. AI in Healthcare: Transforming Patient Care

  • AI is driving necessary advancements in healthcare, with transformative impacts expected by 2025. AI technologies streamline routine tasks such as appointment scheduling and patient intake, helping to reduce administrative burdens on healthcare providers and alleviate workforce shortages. Beyond efficiency, AI offers new possibilities for disease prevention, early diagnosis, and targeted treatments. It leverages data, including medical history, genetic information, and lifestyle factors, to create tailored treatment plans. The utilization of previously unexploited data (97%) can lead to better outcomes. Tools like ChatGPT have demonstrated superior diagnostic accuracy in controlled studies compared to human practitioners, pointing towards a collaborative future where AI complements rather than replaces human caregivers.

  • 2-3. Challenges and Skepticism Towards AI Adoption

  • Despite the promising advancements,AI faces skepticism in the healthcare sector. Reports indicate that 80% of patients desire transparency regarding AI's influence on medical decisions, and only 30% fully trust AI-generated information. Although AI is anticipated to play a central role in advancing medicine by 2025, issues of trust and accuracy remain paramount. Establishing strong governance frameworks and addressing biases within AI systems are essential to ensure that these advancements benefit all individuals and protect against potential downsides.

3. OTT Content Market Dynamics

  • 3-1. Growth of OTT Platforms and K-Content

  • As of January 2025, the OTT content industry is experiencing significant growth, particularly in the K-content sector. According to a report by NewsPim, Netflix is set to release over 30 original Korean titles, with an anticipated recovery and success of K-content production. Notably, upcoming projects include dramas featuring prominent stars and those inspired by webtoon series. Meanwhile, Disney+ is also launching approximately 10 new original Korean series in 2025, underlining the increasing focus on K-content within the OTT market. However, the domestic OTT platforms are facing challenges as international players like Netflix and Disney+ dominate the landscape, indicating a need for strategic development within local companies.

  • 3-2. Strategic Partnerships and Content Development

  • The strategic partnership between Netflix and SBS represents a significant shift in the content supply dynamics within the OTT market. Starting January 2025, Netflix began offering various SBS programs, ranging from new releases to classic favorites, increasing their popularity and resulting in a complex scenario for domestic OTT services like Wavve and Tving, which are currently undergoing merger strategies. This partnership is set against a backdrop of competitive concerns as the content exclusivity previously held by local OTT players is now being compromised, with predictions that other broadcasters may follow suit in collaborating with major international platforms.

  • 3-3. Regulatory Challenges and Market Competition

  • The expansion of OTT services in South Korea faces several regulatory challenges, especially in relation to the competitive environment influenced by major foreign companies like Google and Netflix. Domestic telecom operators have called for legislative action to establish fair usage fees for local ISPs provided to international content providers. Reports indicate that Google and Netflix occupy significant market shares in internet traffic, amounting to 37.5% combined, yet local ISPs receive no compensation for this usage. This regulatory landscape creates pressure on local OTT services, necessitating government support to foster a more balanced competitive marketplace.

4. Media Commerce and Evolving Consumer Behavior

  • 4-1. Integration of Media and Commerce: The Rise of 'Pose Add'

  • The integration of media and commerce is exemplified by the emergence of 'Pose Add,' a new service launched in collaboration between Netflix and Google, which connects shopping with content streaming. This follows the trend of media commerce where consumers are attracted to content that leads to e-commerce. For example, during video consumption, viewers are prompted to pause the show for 5 seconds if they see something appealing, which then displays product images allowing them to shop directly from the series. This innovative approach is set to expand the media commerce market significantly.

  • 4-2. Exploration of Discovery-Based Purchases

  • Discovery-based purchasing has gained momentum as consumers engage with content and inadvertently find products they want to buy, contrasting traditional search-driven shopping. This shift has been propelled by advancements in AI and generative technology, allowing for more personalized recommendations and shopping experiences. In addition, platforms like YouTube have merged shopping features, enabling creators to tag products in their videos, further enhancing the discovery-based purchasing model.

  • 4-3. The Role of Social Media and Influencers

  • Social media platforms play a pivotal role in shaping consumer behavior through influencer marketing and interactive content. Influencers leverage their platforms to introduce products in engaging ways, ultimately guiding their audience toward purchase decisions. The emergence of services like YouTube's affiliate tags allows for seamless transitions from product introduction to purchase, signaling a major evolution in how products are marketed and sold in the digital space.

5. Regulatory and Industry Challenges

  • 5-1. The Debate Over Network Usage Fees

  • The ongoing debate regarding network usage fees highlights growing concerns about how content distributors and creators are compensated for the traffic they generate. This discussion can impact OTT services, potentially leading to higher costs for service providers and affecting their profitability as they navigate competition.

  • 5-2. Legislative Developments Impacting Content Distribution

  • Recent legislative changes have begun to shape the content distribution landscape. For instance, local governments are increasing their advertising budgets for platforms like YouTube due to its effectiveness in reaching the public. In 2023, a government entity allocated approximately 3 billion KRW in its budget for content production aimed at publicity through YouTube, reflecting the platform's growing influence. However, there are concerns over the fairness in how public funds are utilized, especially given Google's tax issues in South Korea.

  • 5-3. The Future of Content Creators in the Digital Landscape

  • The future of content creators in the digital economy remains uncertain as the industry faces various challenges. Reports show that the digital creator economy, valued at approximately 5.3 trillion KRW in 2023, is growing rapidly. However, creators often encounter issues related to rights protection and equitable contracts, prompting legislative proposals aimed at establishing standardized agreements. These developments are crucial for ensuring sustainability and fairness in the creator economy as stakeholders grapple with the power dynamics between creators and platform operators.

Conclusion

  • The findings of this report underscore a transformative era within the media and content industries, driven chiefly by AI agents and OTT platforms. AI agents are revolutionizing sectors like healthcare through automation and personalized services, proving integral in enhancing operational efficiencies. Their application, however, is tempered by skepticism, necessitating robust governance frameworks to ensure unbiased and trustworthy outcomes. Simultaneously, OTT platforms are greatly impacting the entertainment industry, providing expanded access to global audiences via content like Korean dramas, facilitated by giants such as Netflix. Nonetheless, they face substantial industry challenges, including regulatory scrutiny and the need for fair competition policies to safeguard local market interests. Moving forward, recommendations include fostering regulatory environments conducive to innovation while protecting local industries from aggressive international expansions. Additionally, opportunities exist in embracing strategic collaborations and technological integrations that blur the lines between media and commerce, such as 'Pose Add'. Practical applications of these findings suggest businesses should leverage AI capabilities to enhance customer experiences and develop content that resonates globally while navigating the regulatory landscape with agility to sustain growth and relevance in a competitive industry.

Glossary

  • AI Agents [Technology]: AI agents represent a significant technological evolution, providing personalized assistance and automation across various sectors, particularly in healthcare and consumer services. Their development is crucial in enhancing user experiences and operational efficiencies.
  • OTT Platforms [Industry]: Over-the-Top (OTT) platforms have transformed media consumption patterns, allowing content providers to reach audiences directly. Their expansion signifies a shift in the entertainment landscape, with implications for traditional media channels.

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