Geeks often ask stupid TVs. But, as recently explained Vizio's CTO, smart TVs are cheaper than stupid TVs. TVs are so cheap that manufacturers realize their profits by following your viewing habits and selling ads.
Why smart TVs are cheaper than stupid TVs
You would think that a silly TV would be cheaper than a smart TV. After all, a silly TV would not need the processing power or specialized software available on a smart TV. It could simply act as a panel (like a computer screen) and allow you to connect devices via HDMI.
So, why does every TV become a smart TV?
The edge spoke to Bill Baxer, CTO of Vizio, at CES 2019. He toppled the beans:
So look, it's not just a question of data collection. This is the post-purchase monetization of television.
It's a ruthless industry. It's an industry with a 6% margin, right? I mean, you know it's pretty ruthless. You could say that you self inflicted yourself or that you have a more ambitious strategy, and that is the case. The best strategy is that I really do not need to make money with television. I have to cover my costs.
It's not all bad. He then explains that Vizio is investing in its old TVs and is updating them with new software. For example, 2016 Vizio TVs will receive AirPlay support. And advertising is only part of the business model, which also includes money from movie and television rentals initiated from television.
Automatic content recognition follows what you watch
If you never use your smart TV software, you might think that it does not follow you. You use a set-top box or streaming stick like a Roku, Apple TV, Fire TV, Chromecast, Android TV, PlayStation 4 or Xbox One. The integrated software of your smart TV can not follow you, is not it?
False. Modern smart TVs use a technique called "automatic content recognition" or CAB. When you watch something on a device connected to the TV – yes, even if you have a device connected via HDMI – the TV captures some pixels of what you are watching and downloads them to the manufacturer's servers. Servers can be a movie or TV show. The TV maker now knows what you're watching and can sell that data to marketers and advertisers.
It works with any device connected to the TV, whether you're watching cable TV, OTA channels with antenna, or digital streams on Netflix via a streaming box.
For example, advertisers can buy this data to get a better idea of how many people are watching their ads. This data may be related to your IP address. An advertiser can therefore know if you have seen an advertisement on TV and then bought the product in the ad on your computer or your phone.
Smart TVs warn you, somehow
Smart TVs warn you and ask for permission, in general. They may ask to follow your television to provide better recommendations or something vague like that. You can usually disable tracking if you want. But that can be confusing.
For example, to disable this information on my Vizio TV, I needed disable "Smart Interactivity. "It's a terribly misleading name that does not sound like a feature to track my TV habits, instead it sounds like something you would like.
Vizio can pay up to $ 17 million to settle a lawsuit accusing him of following the listening habits of the owners of Vizio TV without proper disclosure. Modern smart TVs will usually ask you if you want to enable it when you install it, although most users quickly click these messages to allow them.
It should also be noted that this only works if the TV is connected to the Internet via Wi-Fi or Ethernet. If you never connect your smart TV to the Internet, it will not be able to download this data, but some features of the TV will not work and updates with new features like AirPlay will not be updated.
What about Crapware?
This is the same type of business model that is used in Windows laptops and inexpensive Android phones. The race to the bottom has made the hardware so cheap that manufacturers have to earn money other than at the time of purchase.
For PCs, this is the "crapware", which is additional software preinstalled on the PC. PC manufacturers are paid to install this junk. Crapware includes free trials for antivirus products that make you pay for something serious not to happen on your PC.
Modern smart TV manufacturers collect data about what you watch, sell ads, and make money when you rent movies and digital TV shows.
Of course, these are not the only sources of income. Smart TV makers can be paid to pre-install TV service applications and bring them to the forefront. Some TV remote controls have buttons dedicated to Netflix and other services. These services have usually also spent money to access this remote control.
Even a lot of streaming boxes are similar
Do you think you are safe because you have disconnected your TV from the Internet and used a streaming box? Think again.
Roku has a similar business model and also accepts funds from streaming services to place dedicated physical buttons for services such as Netflix and Hulu on its remote controls. There are even Roku remote controls with buttons dedicated to multimedia services such as Rdio, which no longer exist.
The Roku streaming box that you have purchased also contains advertising. As Roku's CEO said, Anthony Wood The edge in 2018, Roku derives revenue from advertising and video content, not from hardware sales:
We certainly do not earn enough money to support our engineering organization and operations, as well as the cost of money needed to run the Roku service. It's not paid for by the equipment. It's paid for by our advertising and content sector.
And yes, unless you disable this feature, Roku also tracks what you watch and uses the data to sell ads..
TVs are a means of tracking, advertising and selling to the media
That's why it's so hard to buy a silent TV. Manufacturers are getting enough money to cover the cost of television, but they are not making any significant profit from selling this equipment. They earn money by following your television viewing habits, selling commercials and earning a commission on the purchases and rentals of digital media that you make on TV.
If you disengage from tracking and you never use multimedia applications on the TV, that's fine. They earn enough money with others to afford not to make extra money with people like you. Everything is built into their revenue model.
It's hard to complain too. People love cheap TVs and it's clear that most people do not want to pay extra for TVs without built-in tracking features. After all, you can always disable tracking, if you know what you are doing.