Ever since Disney (NYSE:DIS) announced its streaming service, the question has been about whether Disney stock can absorb the Netflix (NASDAQ:NFLX) level content creation while maintaining its profitability.

The success of Netflix has much to do with the powers of  Artificial Intelligence. With the technology, the company has been able to personalize movie recommendations, based on processing huge amounts of data.

Netflix also has used AI for the movie-making process, say for identifying content categories, scouting for production and editing. Oh, and the technology has also been critical for dealing with the complexities of streaming video so the experience is top-notch.

For the most part, Netflix has shown that algorithms can be a silver bullet in the highly creative world of original content.

A Closer Look at Disney Stock

In light of all this, might Dinsey be at a disadvantage?  Well, we will find out soon. The company is expected to launch its entertainment streaming service in mid-November. Its receotion will be critical for Disney stock price.

I think it’s important to keep in mind that the company has strong technology chops. After all, throughout Disney’s history, the company has been at the forefront of innovation. Some examples include the use of audio-animatronics and monorails as well as automation systems for its films.

Disney has also made some important acquisitions for tech-focused companies like Pixar and BAMTech, which is a streaming platform.

OK, what about AI? Well, the good news for DIS stock is that the company has been making significant investments in this category. At the heart of this is Disney Research, which includes researchers that focus on three areas:

• AI and ML (Machine Learning): This involves the use of deep learning to unlock insights from data as well as to help with content generation.
• Immersive Technologies: This is where researchers leverage technologies to create life-like environments, such as with AR and VR.
• Robotics: This is to develop autonomous systems that can interact with people, say at the theme parks.
  

Future Tech and Disney Stock

No doubt, the research can be extremely complex. Note some of the titles of recent technical papers: “Trajectory-based Probabilistic Policy Gradient for Learning Locomotion Behaviors” and “A Two-Level Planning Framework for Mixed Reality Interactive Narratives with User Engagement.”

In one of the recent papers written in partnership with Rutgers University, there was a model that converts the text of a script into animation!

But the research efforts are not just theoretical, they already have had an impact. For example, the company’s theme parks are essentially mini-communities that allow for experimenting with innovative technologies like Magic Bands.

AI is also playing an important role in the movie-making process. By leveraging relationships with partners like Cisco (NASDAQ:CSCO) and Hewlett Packard Enterprise (NYSE:HPE), the company has been able to measure how users react to content. For the most part, Disney’s rock-solid record with feature films is really no accident.

Something else: the acquisition of Hulu, from partners AT&T (NYSE:T) and Comcast (NASDAQ:CMCSA), is another big tech boost. Founded in 2006, the platform has grown to 28 million subscribers and has features like AI-powered ads, which are based on IBM’s (NYSE:IBM) Watson system.

Bottom Line Disney Stock

Besides AI, Disney stock has various other catalysts. The movie pipeline is solid for this year, with upcoming films like Lion King, Frozen 2, Toy Story 4, and the final Star Wars movie in the original trilogy. There will also likely be a lift from the Star Wars Galaxy Edge Park (at Disneyland and Disney World) and Tokyo’s DisneySea.

Yet the real focus will certainly be on the streaming service. And given the company’s tech prowess and rich film library, it should be a game changer for the company.

Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction.  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.