U.S.-based Connected TV maker VIZIO went public today on the New York Stock Exchange, touting its combined hardware and software offering as a way to leverage the red-hot streaming-video space.
The Irvine, Calif.-based company offered 12.3 million shares at $21 each, according to a statement.
VIZIO, founded by Chairman and CEO William Wang in 2002 after a near-death experience in a plane crash, designs its products in Southern California. It then outsources production to manufacturing partners in Mexico and Asia, including giants such as Foxconn and Innolux, before bringing the finished products back to the U.S. market.
The company is the second best-selling brand of TVs in the United States, its lines featuring 4K-resolution screens at “value” price points that significantly undercut those of flagship sets from LG, Sony, and Samsung. The company also is the country’s biggest-selling brand of soundbars.
Together, those hardware sales generate the majority of VIZIO net revenue, though company executives said its integrated software platform and data collection also generate significant income from advertising, subscription sales, licensing, and other sources.
“Our business model doesn’t just focus on the 24,000 people that walk out of the door with our products every day,” said Wang. “It’s also centered on the tens of millions of people that depend on us for entertainment every day. Owning the device and the operating system empowers us to imagine a future and build it.”
VIZIO TVs use a proprietary operating system, called SmartCast, similar to in-set operating systems found on Samsung and LG TVs, and competing with external streaming devices and software platforms such as Roku, Amazon Fire, Google’s Google TV/Android TV, and Apple TV.
The SmartCast system is built into VIZIO Smart TVs, and updated online by VIZIO regularly with new streaming services, free channels and other capabilities, to keep the offering current. The company said it has 12.2 million active SmartCast accounts.
Services available through SmartCast include Netflix, Disney’s Disney+ and Hulu, Amazon’s Prime Video, Apple TV+, and NBCUniversal’s Peacock, as well as AVOD services such as Tubi and Sony Crackle. Similar to Amazon’s IMDb TV and the Roku Channel, the company also curates two ad-supported channels, one an aggregation of programming from various services, and the other a VIZIO-curated collection of hundreds of ad-supported free networks.
Investors have been bullish this year on standalone streaming services such as Disney+ and newcomers Discovery+ and ViacomCBS-owned Paramount+, sending shares skyward after positive initial subscriber signups. Roku, whose streaming devices and soundbars compete with VIZIO products, has also seen strong investor interest in recent months.
“VIZIO has developed a complete ecosystem: We make both TVs and the software that runs those TVs, plus soundbars that connect the audio experiences,” Wang said. ‘Owning and operating multiple sides of the TV business allows us to move faster, experiment more, monetize differently, and develop a deeper relationship directly with VIZIO owners.”
The company is betting on the growing popularity of connected TVs, which enjoyed particularly strong uptake during the worst of the pandemic as cord-cutting from traditional pay-TV bundles increased and locked-down families began looking for new entertainment options beyond the traditional pay-TV bundle. A raft of high-profile new streaming services also has benefitted from the shift, especially on connected TVs.
In 2019, U.S. consumers spent $18.2 billion on subscription VOD and transactional VOD services, according to estimates by PwC. The consultancy projects those video markets, especially SVOD, will grow to $30.9 billion by 2024.
Ad dollars have also begun shifting from traditional pay-TV outlets to connected TVs, as brands have chased the growing audiences watching video in what seem to be traditional ways, with the benefits of addressable advertising and viewership data.
As with Roku and Amazon’s Fire devices, the SmartCast platform provides another way to generate revenue, grabbing a share of ad dollars shown on many of the services it carries. VIZIO also has a separate subsidiary, Inscape, that uses anonymized audience data captured from actual set use to provide a wide range of viewer insights.
In turn, those technologies can be used for dynamic ad insertion, even with linear channels operated by traditional media companies that are part of the industry’s addressable ad consortium, Project OAR.
VIZIO plans to extract ongoing revenues after initial hardware sales through advertising on those streaming channels, AVOD apps, its home screen and packaging; data licensing through Inscape and ad insertion; transactional and premium VOD purchases; sale of subscriptions for the big streaming services; and even selling high-profile buttons on its remotes.
