Vizio Sees Payment Platform Enabling Sports Betting, Food Delivery

The smart TV “is basically a computer on the wall,” said Vizio Chief Financial Officer Adam Townsend at an investor conference last week, discussing the growing role of the connected TV in the home.

Commenting on the recent launch of the company’s Vizio Account payment platform (see 2208090057), Townsend said the platform in the early stages is a way for customers to consolidate their premium streaming accounts in one payment location. In the future, the company wants the platform to enable “interaction, transactions and commerce.”

Townsend conceded that “it’s going to take a little time” to convince Vizio’s 16.1 million active users to open a Vizio Account, calling it “an important next step in our evolution.” The goal is to expand the TV’s role from a device that simply displays video to one that enables commerce activity including sports betting and food delivery orders. He also envisioned the platform enabling a personal training session “where you’re connected to that TV with a smartwatch, and there are sensors, and they know your telemetry,” he said. Vizio wants to “facilitate the transaction from a financial standpoint.”

Townsend said Vizio is “laying the track in these early days of where the CTV business is headed, to be able to have "optionality" and a broadening opportunity to monetize interaction on [a TV]." The smart TV “won’t just be limited to streaming video and being an entertainment device. It’s going to be a personal life-enhancing device.”

The TV maker lags its streaming counterparts in average revenue per user. Townsend pegged at $40 the ARPU benchmark for more established competitors in the streaming video space; Vizio passed $25 last quarter. “Structurally, we don’t see why we can’t eventually close that gap,” Townsend said, noting two years ago Vizio didn’t have an internal ad sales team. The company has been in the market for only two years "building relationships with ad agencies, with networks, with brand builders and making them aware that Vizio is a destination to reach viewers.”

Vizio’s targeting data with its automatic content recognition technology is key to driving ad growth, Townsend said. Its data can be used to drive viewers to the content they want, but it also gives the company a monetization opportunity by increasing viewers' time spent on certain content, he said. He highlighted Vizio's WatchFree+ app, which the company is counting on to increase ad dollars per user.

The ability to have a “complete data set on viewership and behavior” has become very valuable to Vizio on two fronts, Townsend said. It allows the company to sell targeted advertising for what it says is a better user experience with more relevant ads, enabling a higher cost per thousand (CPM) impressions. The company also licenses portions of data to companies including Nielsen, Comscore, VideoAmp and 605 that are building measurement solutions for the CTV market using Vizio's data.

“When Nielsen thinks about how to measure around traditional linear TV and CTV, our data is increasingly becoming the cornerstone to that product,” Townsend said. Vizio benefits from the generated revenue and from learning “what content to source for our users,” plus “how to bring advertisers that are relevant to those viewers" on the platform in one place, he said.

Vizio is “squarely sitting in front of these trends where consumers are moving more into streaming, an environment where advertisers are seeking to get in front of those eyeballs with targeted advertising that comes off of the data,” Townsend said. Vizio’s position in the CTV market has “changed the business model entirely” to one that’s part hardware sales, part platform revenue, he said. Platform revenue represents about 25% of Vizio’s business, “but it’s 95% of gross profit dollars.”

Commenting on the adoption of Vizio’s smart TV operating system among consumers that have bought its TVs, Townsend said 53% are using its integrated OS vs. 7% who use an external streaming media player. He said the Vizio home screen is designed to help with search and discovery and called the WatchFree+ app “basically a cable replacement.” Giving customers “almost-free cable" allows them to save money to spend on "higher value premium apps that they want to subscribe to,” he said, calling it “a tremendous outcome."