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Taking the smarts out of smart TVs would make them more expensive

CES is always a show about the future of TVs, and this year is particularly interesting. Not only are 4K HDR TVs better and cheaper than ever, but the software side of things is opening up in unprecedented ways. Not only are Google Assistant and Alexa control everywhere, but Apple’s embracing the TV industry for the first time: Vizio and LG TVs will support AirPlay 2 and HomeKit, while Samsung TVs will get an iTunes Movies & TV app, as well as AirPlay 2 support.

I just hung out with Vizio CTO Bill Baxter on the Vergecast, and the conversation was wide-ranging and illuminating. Vizio just announced its 2019 lineup of 4K HDR TVs, and they’re as impressive as ever: there’s brighter, bolder colors from quantum-dot technology for the M- and P-series TVs, and the new flagship P-Series Quantum X line has 480 local dimming zones and a wild peak brightness of 2,900 nits. In terms of pure hardware, these are some of the best 4K HDR TVs I’ve seen yet.

[...] And we definitely talked about the pervasive ad tracking that all smart TVs do — especially after I noticed the new Vizio P-Series in my parents’ house seems to ping the network an awful lot. Baxter told me that he thinks Vizio is the industry leader in disclosing what tracking is happening and letting users opt in or out during setup, and that he’s fine if people choose to turn it off. But he was also clear that TV companies are in a cutthroat business, and that companies like Vizio would have to charge higher prices for hardware if they didn’t run content, advertising, and data businesses.

[...] I guess I have a philosophical question. You guys are committed to low price points and you often beat the industry at those price points. Can you hit those price points without the additional data collection that TV does if you don’t have an ad business or a data business on top of the TV?

So that’s a great question. Actually, we should have a beer and have a long, long chat about that.

So look, it’s not just about data collection. It’s about post-purchase monetization of the TV.

This is a cutthroat industry. It’s a 6-percent margin industry, right? I mean, you know it’s pretty ruthless. You could say it’s self-inflicted, or you could say there’s a greater strategy going on here, and there is. The greater strategy is I really don’t need to make money off of the TV. I need to cover my cost.

And then I need to make money off those TVs. They live in households for 6.9 years — the average lifetime of a Vizio TV is 6.9 years. You would probably be amazed at the number of people come up to me saying, “I love Vizio TVs, I have one” and it’s 11 years old. I’m like, “Dude, that’s not even full HD, that’s 720p.”

But they do last a long time and our strategy — you’ve seen this with all of our software upgrades including AirPlay 2 and HomeKit — is that we want to make things backward compatible to those TVs. So we’re continuing to invest in those older TVs to bring them up to feature level comparison with the new TVs when there’s no hardware limitation that would otherwise prevent that.

And the reason why we do that is there are ways to monetize that TV and data is one, but not only the only one. It’s sort of like a business of singles and doubles, it’s not home runs, right? You make a little money here, a little money there. You sell some movies, you sell some TV shows, you sell some ads, you know. It’s not really that different than The Verge website.

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