A dark reason why televisions have fallen in price

A hand holding a hand in front of a smart TV (Getty Creative)

Your smart TV is watching you. And earn money with you. That’s why TV prices have come down so much in the last five years. We’re not saying it, the director of one of the cheapest TV brands on the market admits it.

Thanks to companies like Vizio and TCL, giant TVs with ultra-slim bezels, better picture quality and integrated streaming services are cheaper than ever.

If you want a 65-inch 4K Smart TV with HDR, you can buy it for less than $500, which may seem surprisingly low for such a big piece of technology, but it can live in your home for years. Upgrade.

But with that low price comes a caveat most people don’t know about: Some manufacturers collect data about users and sell it to third parties. The data may include the types of programs you watch, the ads you see, and your approximate location.

Key to the industry

In an interview in January The Fringe Podcast Vizio CTO Bill Baxter explains well how this field works.

„It’s a very competitive field.”Baxter said. „It’s a 6% margin business. The key strategy is that I don’t need to make money from TV. I need to cover my costs.”

More specifically, companies like Vizio don’t necessarily make money on every TV they sell.

Smart TVs can be sold at or near consumer prices because Vizio can monetize those TVs through data collection, advertising and direct-to-consumer entertainment sales (such as movies).

Or, as Baxter puts it:

“It’s not just about collecting data. It’s about monetizing the TV after it’s bought.”

There are many ways to monetize those TVs after the initial purchase.

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„Some movies sell, some TV shows sell, some commercials sell, you know,” he said. „It’s not really that different from the Verge website.” It’s the additional revenue streams that help companies like Vizio and TCL make good big smart TVs at more affordable prices.

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A TV shop in South Korea.  Photo: REUTERS/Kim Hong-ji

A TV shop in South Korea. Photo: REUTERS/Kim Hong-ji

Without that formula, consumers would have to pay more

Even companies like Sony, which make high-end smart TVs at similarly steep prices, share in this additional revenue. As reported by Ars TechnicaThe latest update to Android TV introduced a whole array of sponsored content, namely ads, on the home screen.

Without that revenue stream, Baxter says, consumers would pay more. „We’ll pick up a bit more margin in retail to offset that,” he said.

Why is Baxter so open about the data his company is collecting now when he was fined 24 months ago? Basically, Vizio now makes clear that it collects data in the terms and conditions of use of its TVs. Yes, same as other manufacturers. That’s why your TV collects usage data, compiles it, and sends it to the manufacturer.

Vizio was fined for that

In 2017, Vizio was resolved Complaint to the Federal Trade Commission (FTC).) alleging that it collected data from 10 million TVs without consumer consent, including IP addresses.

The information is collected through a feature called Smart Interactivity, which is advertised as helping consumers discover content and personalize ads based on viewing habits.

The complaint, filed by the FTC and the New Jersey Division of Consumer Affairs, was settled for $2.2 million. Vizio has admitted no wrongdoing and said no viewing data was linked to any personal information.

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Another data collection service, Samba TV, has relationships with manufacturers such as Sony, Sharp, TCL and Phillips. Consumers are encouraged to activate the software when connecting the TV for the first time to receive content recommendations.

If the user agrees, Samba TV monitors everything on the screen, learns what viewers are watching and works with advertisers to target ads to devices in the Internet-connected home (a notable exception is Netflix, which has an agreement with manufacturers to prohibit third-party tracking of their service). In 2018, Samba TV Collects data from 13.5 million TV sets in the US.

Willingness? If you have a smart TV, you can review the data acquisition policy and opt out through the menu system. Otherwise, consider your TV a passive screen. He is watching you.

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