2 Companies With a Secret Weapon in the Streaming-Media Space

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The rise of streaming-video platforms has been one of the biggest shifts in the entertainment space in the past decade. Within the industry, the key to success is often boiled down to one thing: content. That's sensible -- as the movies, television shows, and other multimedia available on a given platform will naturally play the biggest role in whether people are engaged with a particular service.

However, there's also a lot that goes on behind the scenes, and the role that technology will play in shaping the future of the streaming space is sometimes underappreciated. Like many areas of the technology world, the streaming-media space looks like it will be hugely affected by the rise of artificial intelligence and machine learning technologies. Here's a look at why artificial intelligence applications could be a secret weapon of sorts for iQiyi (NASDAQ: IQ) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL).

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iQiyi's AI-derived advantages

iQiyi has the advantage of being backed by one of the world's most advanced AI leaders. The company was spun off in March from Baidu (NASDAQ: BIDU), China's largest internet search engine and a world leader in AI. Baidu, which retains a roughly 70% stake in its streaming offshoot, is already providing the company with AI and data analytics services, and has plans to continue providing its subsidiary with more support in these fields.

In addition to using AI in advertising applications and its own version of the recommendation systems found on other streaming platforms, iQiyi is implementing AI in some ways you might not expect. The company is using self-adjusting algorithms to estimate which concepts, actors, actresses, and other production talent are most likely to help create content that users will fall in love with. For example, the streaming platform used an AI-based system to help select the cast and shape the content of its hit reality television program Hot Blood Dance Crew. It's also employing AI-generated suggestions to help with the editing of its programs.

If artificial intelligence can reliably provide formulas that improve the success rates of creative projects, the companies with the best access to data and algorithms should gain a major competitive advantage. Artificial intelligence could also help pave the way for streaming-based video games to go mainstream by improving information delivery -- an appealing prospect because iQiyi has signaled it aims to be a bigger player in gaming.

At present, the company's relationship with Baidu and innovative efforts to incorporate AI into content production, delivery, and marketing appear to provide significant differentiation for the company in the Chinese streaming space.

Alphabet's AI at multiple levels

As with iQiyi and Baidu, Alphabet's leadership position in the search engine market gives it incredible access to data. The company is also behind Android -- the world's most used mobile operating system -- and strength in these two categories gives it a natural edge in the AI space.

Alphabet is leveraging these advantages across its businesses -- and in the streaming space on multiple levels. The company owns video platform YouTube, and is making a big push to improve its standing in the cloud infrastructure and platform services space and take market share from chief rivals Amazon.com and Microsoft. The Google parent's strength in artificial intelligence seems to be helping it gain ground on that front.

Case in point: Netflix, which hosts its streaming services on Amazon Web Services is rumored to be testing the waters to potentially shift at least some of its workload to Google Cloud. The reason? Netflix sees the Google platform as offering superior AI features, at least according to the early rumblings.

Alphabet will also be able to use its strength in AI to bolster its own streaming platforms. In addition to tracking what users view on its YouTube platform and serving up tailored recommendations, the company will continue feeding search history and data from its online software suites into improving algorithms to deliver better content suggestions.

YouTube also positions Alphabet as a major player in esports, and artificial intelligence will likely play a significant role in supporting the growth of this emerging content category. Whether through having an automated system for choosing the best camera angles to broadcast to a particular viewer or delivering personalized content recommendations or improving stream quality, artificial intelligence will help Alphabet weave the experience together. Further down the line, it's not unreasonable to expect that AI will enable the type of highly responsive streaming technology that will allow players to operate a fully panoramic in-game camera or navigate live-streamed playing fields on the fly.

According to recent reports, Alphabet also has ambitions to become a much bigger player in the video game industry, and is readying the debut of its own streaming-based gaming platform. The company will likely make use of artificial intelligence in video game content recommendations as YouTube does. More importantly, the company's strength in the AI space and experience in streaming video give it big advantages when it comes to delivering the technology that will be needed to make streamed games responsive for players.

Between paving the way for wins at the cloud services level, supporting the ongoing evolution of the YouTube platform, and helping the company expand its presence in gaming, artificial intelligence is giving Alphabet a big advantage in the streaming-media space.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Keith Noonan owns shares of iQiyi. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Baidu. The Motley Fool recommends iQiyi. The Motley Fool has a disclosure policy.