Disney's 'AI Magic' on Advertising - Will It Be A Boost For Disney+ and Hulu?

Zinger Key Points
  • Disney's "Magic Words" uses AI to tailor ads to moods or scenes, with Omnicom, Dentsu, and other giants testing it.
  • Disney's AI initiative aligns with the industry shift from traditional TV ads, as evident from its revenue decline.

Walt Disney Co DIS employs artificial intelligence to develop “Disney’s Magic Words,” a novel advertising tool for Disney+ and Hulu. 

This tool uses AI and machine learning to analyze scenes, tag them with metadata, and enable brands to tailor commercials to specific moods or scenes, Reuters reports.

Global advertising giants like Omnicom, Dentsu, GroupM, Horizon Media, IPG Mediabrands, and Publicis Media are participating in an early beta test.

According to LSEG, the company experienced a 3% decline in advertising revenue during its fiscal 2024 first quarter, dropping to $3.35 billion, which mirrors the decrease in traditional TV viewership. 

eMarketer estimated that Disney+ generated approximately $790 million in revenue last year, Reuters writes.

Disney’s investment in streaming ad technology is strategic, given the industry trend away from traditional TV advertising, evidenced by a decline in advertising revenue.

In 2023, Walt Disney Co initiated a task force to explore the potential applications of AI across its entertainment conglomerate. 

Walt Disney had multiple job openings tailored to individuals with expertise in AI or machine learning, spanning various divisions, including Walt Disney Studios, the theme parks and engineering group known as Walt Disney Imagineering, Disney-branded television, and the advertising team.

Interestingly, this week, Disney reported first-quarter revenue of $23.5 billion, which was flat compared to the prior year, missing a Street consensus estimate of $23.6 billion. 

The adjusted EPS of $1.22 beat the Street consensus estimate of $0.99. Disney also announced a $1.5 billion investment in Epic Games.

Price Actions: DIS shares traded lower by 2.04% at $108.29 on the last check Friday.

Also Read: The Rise Of Artificial Intelligence In Movies: How The Tom Cruise Deepfake Company Is Helping

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock.

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