A decision by Vizio executives several years ago to build out the company's streaming platform allowed it to take advantage of multiple revenue pipelines that helped offset a recent slowdown in hardware sales, a top executive affirmed on Wednesday.
Speaking at the Morgan Stanley Tech, Media and Telecom conference, Vizio Chief Financial Officer Adam Townsend affirmed the company's hardware sales were flat last holiday season compared to the previous one, but said Vizio was able to weather that storm because it focused capital, energy and time on building out its Platform Plus streaming experience.
The Platform Plus product, which consumers know as SmartCast, includes Vizio's free ad-supported streaming TV (FAST) service WatchFree+, which has become an increasingly important part of the company's overall revenue strategy, Townsend said.
"It's the highest destination for monetization that we have on the platform," Townsend affirmed. "We've been really pleased with the growth in WatchFree Plus."
When WatchFree+ launched several years ago, most of the compelling content on the service came from Paramount Global's Pluto TV. Like other streaming services, Vizio incorporated white label versions of Pluto TV channels to help increase the quality and quantity of free streaming content available to users of its smart TV sets.
The arrangement with Pluto TV still exists today and is a valuable partnership, Townsend said, but Vizio has managed to capitalize on the popularity of WatchFree+ by forging deals with other companies over the last few years.
The company's own data collection practices help Vizio figure out which content to pursue: After noticing a decent chunk of its streaming TV users watched automotive-related programming, Vizio struck a deal with Warner Bros. Discovery to bring the free streaming channel MotorSports to WatchFree+.
Townsend said the success of FAST products like Pluto TV and WatchFree+ initially caught him by surprise — "we live in an on-demand world, why are we going back to linear?" he questioned — but said streaming TV customers have rallied around those services as they seek lower-cost ways to watch lean-back type programming.
For Vizio, WatchFree+ is a no-brainer: It's cheap to operate, yet wildly lucrative in terms of revenue for both the company and its programming partners.
"For us, as the distributor, it's a very low-risk proposition," he said. "It's a partnership where a revenue sharing structure happens — we bring in the content, our ad team sells it, and we share revenue back to the partner. If no one watches it, we didn't spend any money, and we're not going to make any money. But if someone does watch it, then we're both in the game together."
People are watching it: Company executives previously said WatchFree+ is the second most-used FAST service on Vizio TVs. The amount of time spent in WatchFree+ and on Platform Plus in general helped Vizio rake in $477.9 million in platform-related revenue last year, a 55 percent increase compared to 2021.
Advertisers have started to take notice: Townsend affirmed on Wednesday that the company now has more than 400 advertising partners representing brands and services from nearly every marketable sector. Automotive, consumer packaged goods (CPG) and pharmaceutical brands are just some of the companies who have shifted marketing dollars away from traditional television toward connected TV in an attempt to reach consumers through smart advertisements that leverage the type of granular data that Vizio collects.
"The fact that they're waking up, coming there, understanding how to get to viewers, that's a great opportunity," Townsend said. "So we'll build on that."