Why your TV is now a virtual billboard
The television industry is undergoing a shift, with companies focusing less on selling TV sets and more on generating recurring revenue from existing customers. This change has been fueled by the rise of smart TVs and decreasing profit margins on hardware. Television manufacturers are now capitalizing on operating systems which run the devices. Such systems generate revenue through software licensing, revenue sharing from in-app purchases/subscriptions, and selling ads on the OS's home screen/screensaver.
A new revenue source
This strategy of reliance on operating systems, provides a more consistent and profitable source of income than traditional hardware sales. In fact, some TVs even feature physical buttons on their remotes that serve as advertisements for streaming services.
Smart TV ad revenue on the rise
According to GroupM, the world's largest media investment company, smart TV advertisement revenue grew by 20% from 2023 to 2024, and is projected to grow another 20% to reach $46 billion next year. In September 2023, Patrick Horner of analyst firm Omdia reported that "each new connected TV platform user generates around $5 per quarter in data and advertising revenue." This indicates a significant increase in the profitability of smart TVs for manufacturers.
ACR technology and privacy concerns
Automatic content recognition (ACR) technology is central to the smart TV ad business. While most brands claim users can opt out of ACR, instances of misuse have been reported. For example, Vizio was found to be using this feature without user consent. Additionally, ACR is often enabled by default with the option to disable it hidden in settings menus, raising concerns about user privacy and data security.
Big TV brands are turning their sets into data billboards
Major firms like LG and Samsung are enhancing their TVs' ad capabilities as advertisers show increased interest in tracking data from TVs. For instance, LG has begun sharing data collected from its devices with Nielsen, providing the firm with "the largest ACR data footprint in the industry." This collaboration allows companies to access streaming and linear TV data from LG TVs via Nielsen's ONE Ads dashboard.
