Since going public earlier this year, Vizio has operated its business in two distinct segments: Platform Plus and Devices. Platform Plus encompasses Vizio’s advertising and user data business, while Devices includes the sale of Vizio’s hardware. As it turns out, Platform Plus is responsible for more of Vizio’s revenue than its Devices segment; Platform Plus pulled $57.3 million in gross profit over the last three months, while Devices made $25.6 million.
This is because Vizio uses its TVs to gain access to its true moneymakers: advertising and viewer data. Vizio sells many of its TVs at cost (or close to it), which may at first sound like poor practice, but in reality it allows Vizio to begin tracking whatever the new owners of those TVs watch. Vizio can then sell that data, likely to whomever would be interested in which entertainment options garner the most viewership. It’s why smart TVs are somehow more affordable than “dumb” TVs—smart TVs may come loaded with far more capabilities, but they also provide manufacturers with avenues to track users’ viewing data, and sometimes their location as well. In a way, the end users of Vizio’s TVs are Vizio’s real product.
The southern California-based company also earns a significant portion of its keep by advertising shows, movies, and streaming services to users. If you own a smart TV, take a look at your remote: if it has a Netflix button, for example, that button is the product of negotiations between the TV manufacturer and Netflix to the tune of cold hard cash. Homescreen ads and banner ads (like the kind you see while browsing for something to watch) are also prime opportunities for Vizio to make money off of streaming services.
Vizio isn’t the only hardware company that not-so-secretly generates a significant portion of its profits through viewer data. Roku also tracks viewer data in order to more effectively negotiate advertising deals that earn the hardware company a pretty penny. But while Vizio’s earnings report boasts that it’s now the #2 TV brand and #1 sound bar brand in the United States, don’t be fooled—the company might as well be considered a advertising firm.