Vizio recently became a public company, which has allowed us to learn a lot more about how it earns its money. As it turns out, the company makes more from ads, subscriptions, and data than it does from actually selling TVs. And Vizio isn’t the only one, either.
Reports of smart TVs generating lots of revenue for the companies that make them are nothing new. What’s interesting about Vizio, though, is that the company generates more profit from the ads, subscriptions, and data in its smart TV operating system than selling TVs, as reported in its latest earnings report (h/t The Verge).
The company calls this area its Platform Plus segment, and it generated a whopping $57.3 million in gross profit. The Devices segment of the firm, which is responsible for selling TVs and other hardware, generated about half that, at $25.6 million. However, the TV selling portion also generation substantially more revenue, but with a much higher cost of doing business.
As far as what’s generating money on the Platform Plus area, Vizio sells ad placements, includes buttons on remotes, runs ads on streaming channels, takes a cut from subscriptions, and tracks and sells viewer data as part of the InScape program. These can generate lots of money with far less investment than actually designing and manufacturing TVs, soundbars, and other devices.
Vizio has actually seen a massive increase in money generated this way. In fact, revenue increased by 136% compared to last year, so ad placements and user data are becoming ever more lucrative for the company.
Of course, Vizio isn’t the only company that makes tons of money this way. According to The Verge, Roku, a company known for streaming boxes and sticks, actually makes on average $40 per month on each user, which is even more than Vizio. And that doesn’t come from the sale of the streaming device.
“We don’t really make money… we certainly don’t make enough money to support our engineering organization and our operations and the cost of money to run the Roku service,” he said to The Verge. “That’s not paid for by the hardware. That’s paid for by our ad and content business.”
It’s definitely interesting to think about how much money you’re generating for the company that makes your TV long after you’ve finished paying for it. Between subscriptions, ads, and your data, the company responsible for manufacturing your TV has managed to turn you into a highly lucrative long-term investment.
Fortunately, you can turn many of these features off and get back to just receiving the barrage of ads through cable and the platforms on which you watch content.