Smart TV's and their operating systems has been a hotly debated topic the last couple years. I think it's agreeable that it is unlikely for the end state of this operating system race to result in a duopoly market like the PC ( Mac / Windows ) or Smart Phone ( iOS / Android ).
For this post I am focusing on just low priced TVs. This is where Roku & Vizio compete. I find it interesting that Vizio has recently experienced a similar growth rate as Roku while also closing the monetization gap. Both companies are using hardware as a loss leaders for adoption, as their respective platforms are driving 95-105%+ of gross profits.
The remaining question is who has the superior approach to gaining marketshare among the low end consumer?
Roku serves as a partner to OEM's which allows these companies to skip the platform R&D to focus on hardware efficiencies in a bid to drive down the overall price of the TV. Vizio is vertically integrated where they must spend on both hardware R&D and platform R&D. At first this seems like a larger burden for Vizio if they wish to have the lowest priced TVs but perhaps it's advantageous. Perhaps by owning the entire process internally Vizio can allow hardware to become a larger loss leader than Roku.
It seems to just be a CAC/ LTV question. Take a loss of X dollars on the sale of the TV today but make it up over the remaining years as the TV owner consumes advertisements. Improve your platform technology and shorten the payback period. Improve your hardware and keep the user for longer, as there is no guarantee they will buy a Vizio again once the TV breaks.
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