The Media Industry at the Digital Crossroads Artificial Intelligence to the Rescue?

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1 The Media Industry at the Digital Crossroads Artificial Intelligence to the Rescue? Rene Buest Director of Technology Research VDZ Tech Summit November 22, 2017, Hamburg

2 ABOUT ME. Rene Buest Director of Technology Research 7+ Years Experience as Technology Analyst Research Areas Cloud Computing Digital Enterprise Digital Infrastructure & Platforms Former Analyst Firms Crisp Research New Age Disruption Gigaom

3 DIGITIZATION It s an Evolution, Stupid!

4 THE DIGITAL EVOLUTION STEP BY STEP. Cloud impact 1950er Development Electronic Computer 1971 Intel 4004: First microprocessor produced in series 1976 Apple 1984 Cisco 1990 Internet 1997 Netflix 1998 Google 2001 Expedia 2003 Tesla 2003 Skype 2007 Apple iphone 2007 Netflix (on Demand) 2008 Spotify 2009 Uber 2010 Pinterest 2010 WhatsApp Google Amazon Now Alexa/ Echo 1969 Arpanet 1975 Microsoft 1972 SAP 1985 Windows Oracle 1994 Amazon 1999 Salesforce 2004 Facebook 2006 Amazon Web Services 2008 Airbnb 2011 Apple Siri 2010 Instagram 2016 Google Assistant + 40 Years

5 DIGITAL ENTERPRISE EVOLUTION. Digital Enterprise Evolution Digital Enterprise 1.0 ( ) Digital Enterprise 2.0 ( ) Digital Enterprise 3.0 ( ) Mainframes Terminal Systems Personal Computer Local Area Networks Client-Server-Architecture Enterprise Computing Software & Applications Internet Mobile Computing (Smartphones, Tablets) Cloud (IaaS, PaaS, SaaS) Web-Centric-Architecture Software-defined X (SDx) Internet of Things (IoT) API Economy Interconnection with Ecosystems Social Media End-to-End offerings (Devices + Services) Sophisticated Interconnection based on IoT (People, Objects, Locations and more) Context-Economy based on Data & Knowledge AI-defined World (Smart/ Intelligent Environments)

6 THE MAGIC TRIANGLE. Digital Scalability Elasticity Global Reach Localization State of the Art Technologies Faster Deployments/ Releases Cost Effective [ ] Next Generation Business Better Understanding Fancy Experience Deeper Engagement Customized Predictive Conversational Augmented [ ] Cloud AI-driven

7 CHALLENGES FOR THE ESTABLISHED ECONOMY

8 PLATFORM COMPANIES INVADE THE COMPETITIVE SPACE OF ESTABLISHED COMPANIES WITH THEIR STRONG CASH POSITION. THE PLATFORM COMPANIES CASH POSITION Lots of cash to invest with no urgency to prioritize budgets. THE ESTABLISHED COMPANIES CASH POSITION Very little cash to invest, high pressure through external stakeholders (capital market, customers etc.). Play money $ total revenue margin expected by / returned to market total cost $ Play money cost of revenue cost of revenue

9 PLATFORM COMPANIES R&D SPENDINGS ARE INCREDIBLE. Source: Der Spiegel

10 PLATFORM COMPANIES HIJACK THE DIRECT RELATIONSHIP BETWEEN THE ESTABLISHED COMPANIES AND THEIR CUSTOMERS. IN THE PAST: DIRECT CUSTOMER RELATIONSHIP Brand influences customers to buy their products/services TODAY: POINT OF SALE MOVES INTO THE PLATFORM Platform will always satisfy the customers to keep them from switching RETAIL BRAND NO. 1 How can I help you? Need something? BRAND NO. 1 Customers choose platform CUSTOMIZED ADVERTISING, IN-/ OUTBOUND E- COMMERCE BRAND NO. 2 BRAND NO. 3 Customers choose an AI assistant platform! BRAND NO. 2 BRAND NO. 3 Customers choose goods and services from platform Brand offers its products / services on multiple channels Platform chooses goods/services from the brand based on the customers preferences

11 GENERAL AI UNIVERSE BIG INTERNET COMPANIES BUILD THEIR OWN GENERAL AI. THE HOTEL CALIFORNIA-EFFECT Consumers can check out any time they like, but can never leave. Big Internet companies like Amazon, Google and Facebook collect endless amounts of data and create their own General AIs. End consumers give their data/ knowledge to the companies and in return get free access to offered services. The AIs from these companies are used to build disruptive or disintermediating approaches that cannot be used by enterprises who are threatened by these disruptions and intermediations. Serving consumers with free services, getting their data in return and the disruptive approaches are interconnected to create a Hotel California effect. Consumers can check-out any time they like, but they can never leave. Build their own General AIs on the consumers data. GENERAL AI Consumers give data back in return offer (partly free) services to the consumers ESTABLISHED COMPANIES do not have access to these General AIs without endangering their very existence.

12 THE AI-ENABLED ENTERPRISE

13 AI IS THE STRONGEST TOOL. A strong brand, outstanding services and innovation are the conditions for survival. But turning exponential is the only way to successfully compete against companies that are already exponential. turning exponential PLATFORM COMPANIES THINK BIG Platforms are exponential and think big regarding their targets for improvement. They choose to start disrupting industries that touch billions such as healthcare, transportation, communications, energy, finance and telecoms. AI IN THE CORPORATE TOOLKIT AI is one of the tools potentially the only one in the corporate toolkit to help overcome these competitive threats AND make use of the strong side of established players: THEIR EXPERIENCE. With AI anything that is a process in your company today can be automated. On your journey to new business models, imagine what you can to with the financial resources and talent set free when today s business is largely run by AI.

14 THE END-TO-END PLAN FOR THE AI-ENABLED ENTERPRISE. RETHINK STRATEGY Think about a new (exponential) business model. SEMANTIC MAP OF YOUR DATA Accept continuous data flow as a foundation for future strategy. TOP-DOWN RETRAINING Prepare and train your organization for an AI-enabled enterprise and accepting a new business model. S T R A T E G Y D A T A E X E C U T I ON AUTONOMOUS IT OPERATIONS Automate IT operation to receive immediate value brought by HIRO TM and collect data. 4 PREDICTIVE ANALYTICS Use data from the semantic map to expedite, improve business processes and future business events AI-enabled Enterprise DATA-DRIVEN PROCESSES Use data and AI to generate outcome based processes. EXPAND TO OTHER BUSINESS PROCESSES Using knowledge of company gathered though IT automation, make more processes autonomous.

15 ARTIFICIAL INTELLIGENCE & THE MEDIA INDUSTRY

16 WHAT COULD THE MEDIA INDUSTRY DO? STOP PLAYING THE EYEBALL GAME Simplify language to suite more and more basic emotions to get more eyeballs in the short run did not work, did it? Companies with more reach have more eyeballs Companies with more clients know trends better Companies with centralized content management can produce more individualized content START PLAYING THE VALUE GAME Optimize your platform today, but plan to get payed for something you know better than others. Today: Implement narrow AI for recommendations Hook yourself into existing streams and platforms to make money Create an understanding of your clients and your clients friends in the context of your medium Tomorrow: Stop creating the same thing 20 times in one company Instead focus on creating more individualized and better targeted PERSON-2-PERSON content Sell value, not eyeballs (time, security, risk awareness, )

17 SUPPORT OUR GOALS A EUROPEAN APPROACH AI FULL AUTONOMY: With our Artificial Intelligence (AI), established companies can run any process autonomously while retaining their knowledge and monetizing their experience. DP A DATA-POOL FOR ESTABLISHED COMPANIES WITH STRICT DATA PROTECTION UNDER EUROPEAN LAW: We are working on a Data-Pool where established companies data is organized semantically and sharable. Data remains under their full control and ownership, following strict European data protection principles.

18 DIGITAL CORRELATION Everything Is Directly Interconnected.

19 DIGITAL CORRELATION. Data Analytics Internet of Things Advanced Personal Assistants Blockchain Fog Computing Artificial Intelligence Digital Template Economy (3D Printer) Augmented Reality Autonomous Life SDx Cloud Computing Connectivity e.g. 5G

20 THANK YOU

21 GET IN TOUCH. Rene Buest Director of Technology Research arago GmbH Eschersheimer Landstrasse Frankfurt am Main Phone: Mobile:

22 CONTACT. GET IN TOUCH Europe & Other Regions: arago GmbH Eschersheimer Landstr Frankfurt am Main Germany North America: arago Inc. 41 E 11th St New York, NY USA OTHER RESOURCES HIRO TM Story shows data from real HIRO installations across a multitude of clients with IT operations as a sample set. See automation rates by technology or process and examine how HIRO combines many possible solutions out of few Kis to solve a large variety of problems. HIRO TM Portal provides statistical information to monitor, track and analyze automation activities. It also provides resources for enterprises to improve their automation rates. Furthermore, the portal allows users to manage existing licenses and installations as well as to create new licenses. HIRO TM Community is where KIs can be shared, requested and reviewed collaboratively by logged-in users and Arago s experts. It also offers an enterprise functionality where KIs and KI bundles can be shared exclusively within organizations. FOLLOW US

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