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Taking the Smarts Out of Smart TVs Would Make Them More Expensive (theverge.com)
In a wide-ranging interview, Nilay Patel of The Verge speaks with Bill Baxter, chief technology officer of Vizio, about what the company thinks of some TV vendors adding support for Apple's AirPlay 2, and other things. A remarkable exchange on the business of data collection and selling: Nilay Patel: I guess I have a philosophical question. You guys are committed to low price points and you often beat the industry at those price points. Can you hit those price points without the additional data collection that TV does if you don't have an ad business or a data business on top of the TV?
Bill Baxter: So that's a great question. Actually, we should have a beer and have a long, long chat about that. So look, it's not just about data collection. It's about post-purchase monetization of the TV. This is a cutthroat industry. It's a 6-percent margin industry, right? I mean, you know it's pretty ruthless. You could say it's self-inflicted, or you could say there's a greater strategy going on here, and there is. The greater strategy is I really don't need to make money off of the TV. I need to cover my cost.
And then I need to make money off those TVs. They live in households for 6.9 years -- the average lifetime of a Vizio TV is 6.9 years. You would probably be amazed at the number of people come up to me saying, "I love Vizio TVs, I have one" and it's 11 years old. I'm like, "Dude, that's not even full HD, that's 720p." But they do last a long time and our strategy -- you've seen this with all of our software upgrades including AirPlay 2 and HomeKit -- is that we want to make things backward compatible to those TVs. So we're continuing to invest in those older TVs to bring them up to feature level comparison with the new TVs when there's no hardware limitation that would otherwise prevent that.
And the reason why we do that is there are ways to monetize that TV and data is one, but not only the only one. It's sort of like a business of singles and doubles, it's not home runs, right? You make a little money here, a little money there. You sell some movies, you sell some TV shows, you sell some ads, you know. It's not really that different than The Verge website.
Patel: One sort of Verge-nerd meme that I hear in our comments or on Twitter is "I just want a dumb TV. I just want a panel with no smarts and I'll figure it out on my own." But it sounds like that lifetime monetization problem would prevent you from just making a dumb panel that you can sell to somebody.
Baxter: Well, it wouldn't prevent us, to be honest with you. What it would do is, we'd collect a little bit more margin at retail to offset it. Again, it may be an aspirational goal to not have high margins on our TV business because I can make it up downstream. On the other hand, I'm actually aggregating that monetization across a large number of users, some of which opt out. It's a blended revenue model where, in the end, Vizio succeeds, but you know, it's not wholly dependent on things like data collection.
Bill Baxter: So that's a great question. Actually, we should have a beer and have a long, long chat about that. So look, it's not just about data collection. It's about post-purchase monetization of the TV. This is a cutthroat industry. It's a 6-percent margin industry, right? I mean, you know it's pretty ruthless. You could say it's self-inflicted, or you could say there's a greater strategy going on here, and there is. The greater strategy is I really don't need to make money off of the TV. I need to cover my cost.
And then I need to make money off those TVs. They live in households for 6.9 years -- the average lifetime of a Vizio TV is 6.9 years. You would probably be amazed at the number of people come up to me saying, "I love Vizio TVs, I have one" and it's 11 years old. I'm like, "Dude, that's not even full HD, that's 720p." But they do last a long time and our strategy -- you've seen this with all of our software upgrades including AirPlay 2 and HomeKit -- is that we want to make things backward compatible to those TVs. So we're continuing to invest in those older TVs to bring them up to feature level comparison with the new TVs when there's no hardware limitation that would otherwise prevent that.
And the reason why we do that is there are ways to monetize that TV and data is one, but not only the only one. It's sort of like a business of singles and doubles, it's not home runs, right? You make a little money here, a little money there. You sell some movies, you sell some TV shows, you sell some ads, you know. It's not really that different than The Verge website.
Patel: One sort of Verge-nerd meme that I hear in our comments or on Twitter is "I just want a dumb TV. I just want a panel with no smarts and I'll figure it out on my own." But it sounds like that lifetime monetization problem would prevent you from just making a dumb panel that you can sell to somebody.
Baxter: Well, it wouldn't prevent us, to be honest with you. What it would do is, we'd collect a little bit more margin at retail to offset it. Again, it may be an aspirational goal to not have high margins on our TV business because I can make it up downstream. On the other hand, I'm actually aggregating that monetization across a large number of users, some of which opt out. It's a blended revenue model where, in the end, Vizio succeeds, but you know, it's not wholly dependent on things like data collection.
How much money DO thwy make after purchase?
If it's 200 on a 1200 appliance, I'll gladly give yoi 1500 to just give me a dumb panel and fuck off.
Then how can Sceptre sell 4K "dumb" TVs so cheap? I bought a 50" UHD TV for $299. You can get these at Walmart and Amazon, among other places.
http://www.sceptre.com/store/TV/4K-UHD-TV-category1category73.html
Learning HOW to think is more important than learning WHAT to think.
It seems to be part of a massive shift in the population as a whole. Have you watched any music videos in the last couple of years? Scenes don't generally last for more than a few seconds. Sometimes it's all of a second. This has started to pick up steam across all of media, where it's chop, chop, chop. Cutting from one shot, one idea, one talking point to the next.
I think social media helps fuel this fire of hyperactivity and ADD. Smart phones are a blast furnace for it. I'm constantly blown away by how many people let everything on their phone notify them of everything. It's a constant ding, ding, ding, pay attention to me! No me! No, over here! Pavlov would be having a field day doing research.
A sizable percent of the population no longer seems capable of having a conversation over a beer. I don't know how we fix that. I hope it's just the growing pains of the switch to the internet and hyperconnectivity, and that we'll figure it out in time. Note the other /. story where the bulk of fake news sharing is done by old people who didn't grow up with the internet - seems like the kids who did are far less trusting. I'm hopeful that kids growing up in the Pavlovian new world we have can see the impact it has on their parents, and realize that they need to take steps to prevent that.
We really need to get back to a place where we can have deep, introspective conversations about complicated topics. That's the only way we can really make progress in the world.
Velociraptor = Distiraptor / Timeraptor