For two decades, the Vizio brand has been synonymous with cost-affordable, featured filled television sets that took on the likes of Samsung, LG and Sony. But over the last few years, Vizio has quietly turned its attention away from hardware as the cornerstone of its business, shifting its focus instead on its growing platform and advertising products that has already overtaken its hardware revenue in terms of growth.
On Tuesday, Vizio revealed the company shipped roughly the same number of smart television sets — 1.5 million — during its Q4 2022 compared to the previous year, and around 5.2 million smart TVs for all of 2022 compared to 5.5 million during 2021.
Despite its hardware sales barely moving the needle in either direction, Vizio said revenue from hardware sales fell 24% during Q4 to $397 million, about $133.7 million less than what it earned during the same quarter in 2021. Hardware revenue for all of 2022 was reported at $1.385 billion, down from $1.815 billion reported the previous year.
On a conference call with investors and reporters, Vizio executives confirmed a lukewarm holiday season and other macroeconomic effects meant customers weren't buying as many smart TVs as the company had hoped. Officials might have sweated those details if Vizio hadn't posted an impressive gain in its platform revenue, which saw a 30% quarterly increase to $136.5 million. Overall platform revenue for 2022 was reported at $477.9 million, a 55% increase compared to the prior year.
Adam Townsend, the company's chief financial officer, said revenue from Vizio's Platform Plus product grew 30% to a new quarterly record. Platform Plus includes advertising revenue from Vizio's homescreen, video products and its free, ad-supported streaming TV service (FAST) WatchFree+.
Over the last few months, media companies have complained of economic headwinds in the traditional advertising market. But connected television advertising has experienced significant growth, something Townsend said helped Vizio grow its advertising partnerships to more than 130 brands and companies.
During Q4, Platform Plus accounted for 26% of the company's overall revenue, a pie that has become increasingly bigger during the last few consecutive quarters. The number of brands attracted to Vizio grew by 37%, Townsend affirmed.
"There was definitely some softness in the ad market, especially in December," Townsend affirmed. "But, in the face of that softness, we were able to add 130 new advertisers to the platform."
The softness came primarily from media and entertainment (M&E) companies, who have shifted capital away from marketing initiatives amid pressure from investors who have scrutinized outsized content production and marketing costs. While Townsend said Vizio still saw increased ad revenue from M&E brands, the majority of new ad partnerships came from other sectors, including telecom, pharmaceuticals, automotive and insurance.
Those advertisements are getting in front of more people each quarter: During Q4, Vizio said it added more than 800,000 active users to its SmartCast platform, growing the total number of active accounts to 17.4 million, up from the 16.6 million that was reported during Q3.
William Wang, Vizio's CEO, said the company's dual business model — hardware sales coupled with platform and advertising revenue — allowed it to "continue investing in innovation to elevate our award-winning devices even further."
Executives also noted that other companies, including Roku, have taken notice. When Roku announced in January that it would start manufacturing its own smart television sets — something Roku affirmed would lead to better hardware and software innovations — officials at Vizio saw it as validation that their dual business model was right, and they welcomed the competition.
"We've built a great business model, which everybody envies," Wang said. "I do see the competition to be pretty strong in the next few years, having new players like Roku come in to compete in the device space directly...competitors, like [Roku], have a lot to learn in the next few years. And we're ready to compete."
That competition won't extend to Vizio entering the smart home market with devices beyond TVs and sound bars, Wang said, a nod to Roku's recent decision to partner with tech maker Wyze for a line of surveillance cameras, LED strips and smart plugs.
"We really don't need to build a light bulb," Wang said.