LG Electronics acquired Alfonso, an American startup that analyzes TV advertisement data using artificial intelligence (AI) technology. It is a pavement to upgrade the content provided to customers who purchase TV to the next level.
It is a concern for how long LG Electronics President Kwon Bong-seok’s wide move will continue. Two weeks ago, LG Electronics announced the establishment of a joint venture with Canada’s Magna International, the world’s third-largest auto parts maker, and challenged the future car market.
○ LG Electronics is looking for food in the future
LG Electronics announced on the 7th that it has secured a 50% stake by investing about 80 million dollars (about 87 billion won) in Alfonso. Foreign media said that LG secured nearly 60% of the stake. Alfonso is a data analysis company founded in 2012. It analyzes TV advertisements and contents based on AI technology. It has TV viewing data of 15 million households in North America alone. It is known that the level of the independently developed AI video solution is also significant.
Alfonso’s customers are diverse. In addition to LG Electronics, Japan’s Sharp and Toshiba, and China’s Hisense and Skyworth are also promoting projects. A company official said, “The era of success has passed if TVs are made well.” “We plan to raise LG TV’s competitiveness to the next level by expanding our business to areas such as services, contents, and software.”
In the industry, it is evaluated that President Kwon has started to find food for the future in earnest. President Kwon took office as CEO last year and said, “We will secure new growth engines through proactive responses such as digital transformation.” In this year’s New Year’s speech, he urged to abandon the manufacturing industry-centered thinking, saying, “To create unprecedented innovation, we must focus on’destructive change’ rather than’gradual growth’.”
There are also observations that LG Electronics will increase the competitiveness of existing businesses through mergers and acquisitions (M&A) or joint venture establishment. It is a scenario that collaboration with external parties will be further strengthened in order to expand the ecosystem of’LG ThinQ Platform’ that drives electronic products based on AI and’Web OS Auto’, an infotainment platform for vehicles.
○From TV manufacturing to content provision
It is also of interest what synergy effects LG Electronics will enjoy with the acquisition of Alfonso. LG Electronics has been operating the’LG Channel’ since 2016, where customers who purchase smart TVs can enjoy content for free.
In Korea, there are more than 140 free channels based on platforms such as Wave and CJ ENM, and in the US, there are more than 300 free channels based on content platforms such as Jumo and Floto. The total number of channels operating all over the world reaches 1601. It is also providing a content streaming service. Currently, there are over 2,000 movies that can be selected by accessing LG channels in the US.
The industry predicts that LG Electronics will apply Alfonso’s personalized recommendation algorithm to LG channels. The strategy is to attract potential customers in the TV market by providing customized content that users want. LG Electronics’ content revenue is also expected to increase. If advertisements on the LG channel are customized, the price of advertisements is likely to increase.
An official at LG Electronics said, “There are various fields other than LG channels that Alfonso’s data analysis technology can be applied to,” he said. “We will be able to develop a business model that satisfies the consumer’s desire for content.”
Reporter Song Hyung-seok [email protected]