Vizio’s Chief Technology Officer, Bill Baxter, outlined the strategy to The Verge during the Consumer Electronics Expo in Las Vegas, Nevada last Monday.
“This is a cutthroat industry. It’s a 6% margin industry,” Baxter said. “The greater strategy is I really don’t need to make money off of the TV. I need to cover my cost.”
More specifically, electronic manufacturers like Vizio have figured out that they can sell smart TVs at, or around cost, and concentrate on data harvesting and post-purchase monetization.
As Baxter put it: “It’s not just about data collection. It’s about post-purchase monetization of the TV.”
He explained there are several ways to monetize smart TVs: “You sell some movies, you sell some TV shows, you sell some ads, you know.”
Baxter said, without the additional forms of revenue, consumers would be paying higher premiums for smart TVs. “We’d collect a little bit more margin at retail to offset it.”
Listen to the full interview here
Vizio TVs, have the ability, with user opt-in, track anything that is on the TV, what the company calls “automatic content recognition.” That data used to be sold off to third-party data aggregators, but after the Federal Trade Commission and New Jersey slapped the company with a multi-million dollar fine in 2017.
Legal documents from the case reportedly show that Vizio installed software on 11 million smart TVs to track viewing habits without consumers’ knowledge.
Now, Vizio keeps the data but sells targeted advertising in a platform model like Google and Facebook.
So you must be wondering how much data is Vizio collecting from smart TVs?
Well, the Verge’s editor-in-chief, Nilay Patel, tweeted that a connected VIZIO P-Series Class 4K HDR Smart TV pings a server over 500,000 times a week or nearly once every second, much more than the typical device.
My parents’ brand new Vizio P-Series TV (which is not set up to stream anything, they have an Apple TV) pings a server 10x more than any other device they own pic.twitter.com/C7BHyFmzAh
— nilay patel (@reckless) January 6, 2019
Vizio is watching you…