Early this year, electronics company Vizio filed an IPO, and their newly-released third quarter earnings reveal an interesting business success: they made more than twice as much profit from their "Platform Plus" service, which includes advertising and data farming, than they did from actual TVs.
As The Verge explains:
When Vizio filed to go public, it described the difference between the two divisions. While Devices is easy to understand — 4K TVs, soundbars, etc. — Platform Plus is a little more complicated. It counts money made from selling ad placements on its TV homescreens, deals for the buttons on remotes, ads that run on streaming channels, its cut from subscriptions, and viewer data that it tracks and sells as part of the InScape program.
Where the numbers keep growing is in its number of active SmartCast accounts, which are now over 14 million, and how much money it makes from each user on average. That number has nearly doubled from last year, going from $10.44 to $19.89. On the call with investors and analysts, Vizio execs said 77 percent of that money comes directly from advertising, like the kind that runs on its WatchFree Plus package of streaming channels, a group that recently expanded with content targeting. The next biggest contributor is the money it makes selling Inscape data about what people are watching.
To be fair, television manufacturing also has a much higher overhead — as the company's earning reports note, they netted $502.5M from devices, compared to $85.9M from Platform Plus. In terms of profit, however, this translated to $25.6M from devices … and $57.3M from Platform Plus.
Vizio's profit on ads, subscriptions, and data is double the money it makes selling TVs [Richard Lawler / The Verge]
Image: Mike Mozart / Flickr (CC-BY-SA 2.0)