Vizio recently went public, which has allowed us to learn a lot more about how the company makes money. As it turns out, the company makes more money from advertisements, subscriptions, and data than it does from selling TVs. And Vizio isn’t alone in this regard.
Smart TVs are generating a lot of money for the companies that make them, according to reports. What’s interesting about Vizio is that, according to its most recent earnings report (h/t The Verge), the company makes more money from ads, subscriptions, and data in its smart TV operating system than it does from selling TVs.
This is referred to as the Platform Plus segment by the company, and it generated a whopping $57.3 million in gross profit. The firm’s Devices segment, which is in charge of selling TVs and other hardware, generated roughly half of that, at $25.6 million. However, the TV selling segment generates significantly more revenue, but at a much higher cost of doing business.
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 to generate revenue on the Platform Plus side.
These can generate a lot of money for a lot less money than designing and manufacturing TVs, soundbars, and other devices.
Vizio has seen a significant increase in revenue generated in this manner. Revenue increased by 136 percent over the previous year, indicating that ad placements and user data are becoming increasingly valuable to the company.
Of course, Vizio isn’t the only company that makes a fortune in this manner. According to The Verge, Roku, a company known for streaming boxes and sticks, earns $40 per month on average from each user, which is more than Vizio. And it is not derived from the sale of the streaming device.
“We don’t make much money… “We certainly don’t make enough money to support our engineering organization, operations, and the cost of running the Roku service,” he told The Verge. “That is not covered by the hardware.” That is funded by our ad and content businesses.”
It’s fascinating to consider how much money you’re generating for the company that makes your television long after you’ve paid for it. The company that makes your TV has managed to turn you into a highly profitable long-term investment through subscriptions, ads, and your data.
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.