Vizio has no plans to expand overseas, remains focused on U.S. growth, CFO says

Vizio currently has no plans to launch its line of Internet-connected TV sets overseas, and is instead focusing on growing its connected TV platform in the United States, a company official confirmed this week.

Speaking at the BofA Securities 2023 Global Technology Conference on Wednesday, Vizio Chief Financial Officer Adam Townsend said the company is focused on growing adoption of its Platform Plus streaming platform in the United States, in large part because it feels the domestic market has the greatest opportunity to generate revenue from advertising and subscription sales long after users have purchased their TV sets.

"Our priorities are to focus on the opportunity in the U.S.," Townsend affirmed. "There's tremendous headroom for growth in the U.S. — we've only been in the CTV marketplace in terms of having our own internal ad sales team for about three years, barely three years — so it's early days for us."

Townsend said Vizio currently has around 18 million monthly active users who are engaged with streaming content on Platform Plus, which includes third-party apps powered by the SmartCast platform, as well as the company's own ad-supported streaming service WatchFree+.

Like other streaming platforms, Vizio generates revenue from Platform Plus primarily through advertising. It recently launched a subscription management platform, called Vizio Account, where users of its smart TVs can manage certain billing-related aspects of some streaming services; Vizio earns a commission whenever someone signs up through Vizio Account.

While Vizio's connected TV business is relatively new, it is already generating significant revenue for the company, and is on track to surpass money earned from its hardware sales soon. Its most-recent financial earnings report showed sales of Vizio smart TVs dropped 32% while its ad revenue jumped 24%.

Some of Vizio's competitors, including Roku and Amazon, have expanded their platform overseas in an effort to capture more streaming-related dollars. Townsend said Vizio isn't going to follow their lead, believing the domestic market is the best place for the company to monetize the shift from cable and satellite to streaming.

"We know there's a lot of headroom to our ARPU [average revenue per user] opportunities...we're now at roughly a $30 ARPU, we know some in the market are north of $40," Townsend said. "And, so, we're looking at, how do we close that gap as quickly as possible, and actually surpass that? Because we think being in the U.S. only is the most-monetizable marketplace for what we're doing."

A study published earlier this year by market research firm Magna suggests Vizio is on the right track: The report said the domestic advertising market will climb to $326 billion, a 3.4% increase compared to last year. Companies with free, ad-supported streaming services and retail media networks will get most of the spoils, Magna said.

But is the domestic market going to tap out anytime soon? Jason Cohen, a former financial analyst who spent more than a decade at Buckingham Capital Management, believes there is still a tremendous amount of room for growth, particularly as more consumers ditch cable and satellite for streaming platforms.

"Today, there's 60 million cable and satellite households still watching that content through their TV," Cohen, who now runs the streaming marketplace MyBundle.TV, said in an interview with Fierce Video. "All those viewers are going to shift over, one way or another, from the cable box to streaming. And the TV manufacturer has an opportunity — especially on the FAST side, on the ad side — to generate higher and higher ARPU. We still think there's plenty of opportunity, certainly here in the U.S., for that growth."

Townsend echoed similar sentiments at the tech conference on Wednesday, pointing to a Parks Associates white paper released last year that said 55% of American households use a fully-integrated smart TV set. The Vizio executive read that report and saw things another way: There are 45% of Americans who don't own a smart TV, and Townsend hopes they'll come Vizio's way.

"We're going to keep pushing to have a great product, so that it increases the probability that someone chooses a Vizio when they go into a story," he said.