A game-theoretic analysis on AI-assisted content production decision in digital content supply chains

Artificial intelligence (AI) has significantly transformed digital content supply chains by increasing upstream production efficiency, but it also raises consumer resistance. The conditions under which content suppliers should adopt AI for content production, as well as the implications for the entire supply chain ecosystem, are still unclear. This paper develops a game-theoretic model of a digital content supply chain comprising two upstream content suppliers with high and low production capabilities, a platform acting as a digital distribution channel, and a unit mass of consumers. Once generated by the content suppliers, the content is distributed to the consumers through the platform, and the low-capability content supplier considers adopting AI to assist production. Our analysis yields the following insights. First, for the low-capability content supplier, adopting AI is beneficial only when AI technology is sufficiently advanced and consumer resistance is low. Second, different from the common belief that AI-assisted content production will hurt non-AI suppliers, we find that the high-capability content supplier who does not use AI can still indirectly benefit from his competitor’s AI adoption, provided that the substitutability between content suppliers is low and consumer resistance is not negligible. Third, AI adoption amplifies the effectiveness of the platform’s incentives in improving content quality. Consequently, the platform is motivated to increase incentives following AI adoption, leading to an improvement in overall content quality. Ultimately, from the platform’s perspective, AI adoption is profitable only when the marginal revenue exceeds a certain threshold. The findings provide practical guidance for content suppliers’ AI adoption decisions and platforms’ incentive design in the evolving digital content supply chains.