Vizio executive shrugs off competition from Roku TVs

A Vizio executive said this week the company is not overly concerned with competition from Roku after the streaming platform announced its intention to design and make its own smart TVs.

Speaking at the 25th annual Needham Growth Conference on Tuesday, Vizio Chief Revenue and Strategic Growth Officer Mike O'Donnell said his electronics company has been in the television space for more than two decades, and competition from other companies "is nothing new for us."

O'Donnell acknowledged this year is expected to be highly competitive in terms of hardware sales and advertising. While Vizio has been involved in selling its line of television sets for more than 20 years, the advertising business is relatively new to the company, with the company's undertaking a massive shift toward focusing on the advertising and streaming platform business just three years ago.

In many ways, Vizio and Roku's history parallel each other: Both brands have been selling electronics for roughly the same amount of time. Like Vizio, Roku recently shifted its focus toward its platform and advertising business. And, like Vizio, Roku's platform business is quickly becoming a bigger and more-financially lucrative part of its company.

On Tuesday, O'Donnell reiterated a line that other executives have made at similar conference in the past: That the era of the streaming dongle is "dead." He pointed to data collected from Vizio TV sets that showed the majority of time spent on its smart TVs is done through Vizio's own operating system, called SmartCast, while around 6% is spent using an HDMI input for a separate streaming dongle, game console or other non-linear device.

Vizio executives are not alone in suggesting the era of the streaming dongle has peaked, with a report from Parks Associates noting that while streaming services have seen an increase in adoption, sales of media players that connect TV viewers to streaming services "have plateaued."

"I think, in the long run, the dongle doesn't have a long shelf life," O'Donnell affirmed. "I think, for smart TVs, the price points have come down, and I think all the capabilities are there directly through the smart TV."

Meanwhile, O'Donnell pledged that Vizio still has a lot of room to grow: "There's only 55% of homes, I think, today that have smart TVs," he said. "So, there's still a huge runway ahead of us in terms of smart TV growth and adoption."

While that other 45% might consider a Roku-designed and made TV set in the future, O'Donnell suggested getting those TVs in front of the consumer isn't as simple as a press release that touts low price points (Roku TVs will reportedly start at $120). He noted Vizio has long-standing relationships with retailers like Walmart and Target, where Vizio-made TV sets sell well.

"We understand how to make sure that we stay front and center within those retailers," O'Donnell said.

But Vizio has its own set of challenges: The company's hardware sales have remained relatively flat over the last few financial quarters. Growth at Platform Plus — the brand that includes SmartCast as well as Vizio's free, ad-supported streaming service WatchFree+ — has been somewhat stagnant, with Vizio counting 16.6 million monthly active Platform Plus users last quarter, an increase of about 500,000 users compared to the previous quarter.

Last August, Vizio's Chief Financial Officer Adam Townsend said the company was considering ways to lower the cost of its smart TV hardware in order to spur adoption of SmartCast and other Platform Plus products. On Tuesday, O'Donnell said the company's goal was to get as many SmartCast-powered TV sets into homes as possible, and keep users glued to their screens.

"We need to sell devices to get into the home, we need to get those devices activated, connected to the Internet, and we need to drive as much engagement as possible," he said.

What Vizio won't be doing in the future is straying away from its dedication to the smart television business simply to expand the hardware sales category on its balance sheet.

"We will not be making a refrigerator, or washer, or dryer," he promised.