Brand livestream mode options: AI vs KOL livestream in the platform supply chain

Abstract

PurposeDriven by the rapid expansion of online retail and the surge in livestream commerce, the impact of different livestream mode on brand and platform performance has become a critical issue. This paper analyzes the impact of artificial intelligence (AI) and key opinion leader (KOL) livestream on the profitability of brands and the platform, incorporating the effects of horizontal interactions to identify the optimal livestream mode.Design/methodology/approachThis paper develops a model of a platform supply chain involving two brands and a platform, where each brand independently decides whether to utilize KOL or AI livestream. Applying Stackelberg game approach, the study derives equilibria for various livestream scenarios, identifying the optimal livestream mode for both parties. Additionally, the model is extended to incorporate asymmetric market potential and network externality to evaluate their impact on a brand’s choice of livestream mode.FindingsSeveral interesting and important results are derived in this paper. Firstly, it is found that AI livestream enables brands to leverage network externality and mitigate the market disadvantage, thereby gaining a competitive advantage. Secondly, while KOL livestream promotes trust, the medium KOL commission rates could cause brands to be trapped in a prisoner’s dilemma, and excessively high commission rates may render them less profitable. Thirdly, the KOL commission rate, network externality intensity, horizontal interactions and market disadvantage are critical determinants influencing a brand’s choice of livestream mode.Originality/valueThis study is the first to investigate the effects of horizontal interactions, asymmetric market potential and asymmetric network externality on livestream mode selection by brands within a platform supply chain. The research provides valuable insights into optimizing livestream strategies to enhance brand profitability.