Companies are increasingly using algorithms to improve the user experience. One prominent example is that of Netflix and how it now automatically queues the next show for viewers before the current episode is finished, thus making it easier to continue watching new episodes. Another company, Instagram, has completely tailored its ‘Explore tab’ to its users, displaying only images that the app determines are related to a user’s personal interests and updates itself if one’s interests change. Additionally, it has improved the search functionality for pictures, added videos and trending tags and made it easier to view pictures by location. These improvements have seen Instagram’s engagement levels increase by 400%.
How does the use of algorithms impact the cost structure for companies, and what are the economic implications for competitors who do not use this technology in the market?
Hi, I see three pretty different questions there:
- How algorithms enable progress ont the user experience
- How they affect the cost structure of the companies
- How those two sides (UX and cost) will affect the competition between companies who invest in advanced algorithms v. those who don’t do so
Maybe it is possible to you to get to one or two of those three points in a single question? I actually believe that the most original one respect to our sources is n°2.
According to me you already have the answer to your question in the question: companies use algorithms to maximise their profits, manage their production better (to match demand in real time for example), increase users’ participation / engagement.
Could you maybe reformulate to be more precise about the answer you are looking for ?
Many thanks in advance.