Your TV set has become a digital billboard. And it’s only getting worse.

🌈 Abstract

The article discusses how the TV industry is shifting its focus from selling TV sets to generating revenue from viewers through advertising and data collection. It explores how TV operating systems have become a lucrative business for manufacturers, allowing them to access recurring revenue streams from ad sales and user data tracking.

🙋 Q&A

[01] The value of software

1. What are the key ways TV OS providers are generating revenue?

• Licensing the TV OS software
• Revenue sharing from in-app purchases and subscriptions
• Selling ads, including on the OS home screen, screensaver, and free ad-supported streaming channels

2. How significant is the revenue from smart TV ads?

• Smart TV ad revenue grew 20% from 2023 to 2024 and is expected to grow another 20% to reach $46 billion next year.
• Each new connected TV platform user generates around $5 per quarter in data and advertising revenue.

3. What is the role of automatic content recognition (ACR) technology in the smart TV ads business?

• ACR technology is at the heart of the smart TV ads business, allowing TV brands to track user viewing data.
• Most TV brands claim users can opt out of ACR, but it is sometimes turned on by default with the off switch buried in settings.
• Including ACR on a TV reflects the TV maker's priorities, as most users have little to gain from it but face privacy concerns.

[02] When TVs watch you back, so do corporations

1. How are major TV brands like LG and Samsung increasing their TV's ad capabilities?

• LG started sharing data gathered from its TVs with Nielsen, giving the data firm "the largest ACR data footprint in the industry."
• LG expects to have 300 million webOS TVs in homes by 2026, representing a significant data-collection and recurring-revenue opportunity.
• Samsung updated its ACR tech to track exposure to ads viewed on its TVs via streaming services, and is trying to make its ACR data more valuable for ad targeting.

2. What are the implications of TV brands' focus on ad sales and data collection?

• TV brands are increasingly prioritizing data collection and the ability to sell ads, turning their products into "data-prolific billboards."
• This shift represents a move away from the traditional TV business model of selling as many TV sets as possible, towards a focus on viewers as the most lucrative asset.