Vizio is preparing to expand its presence in the connected TV space by licensing its smart TV operating system to third-party manufacturers, a senior executive confirmed on Thursday.
On a conference call following the company’s earnings release, CEO William Wang said the move follows years of development and optimization of Vizio’s proprietary software, which has fueled record advertising revenue and average revenue per user (ARPU). The company believes its operating system can now serve as a platform for other manufacturers seeking alternatives in a competitive TVOS market dominated by Google, Roku and Xumo.
“Over the past few years, we have been continuously retooling and enhancing our operating system to unlock further growth opportunities,” Wang said. “Today, we are beginning to explore partnerships with other TV OEMs looking for alternatives within the CTV market.”
While emphasizing he remains “a firm believer in the integrated experience,” Wang said Vizio will target TV makers seeking deeper collaboration with a partner that “has resources and the know-how” to help them build better products. “We believe we can create mutually beneficial partnerships that don’t currently exist in the market,” he added.
Chief Financial Officer Adam Townsend said early discussions with potential partners indicate strong demand for a new entrant in the TVOS ecosystem. “There’s a real demand for something different in the market,” Townsend said, adding that OS licensing could expand Vizio’s total addressable market beyond its current 11 to 12 percent share of the 40 million TV units sold annually in the United States.
“The more we can expand our platform into the market, the more we can scale our advertising business, the more viewership we can take advantage of,” Townsend said. “That makes Vizio a more important partner for advertisers and content partners.”
The strategy builds on Vizio’s Platform+ business, which has posted consistent growth even as device revenue and TV shipments decline. Platform+ revenue rose 22 percent year over year to $156 million in the third quarter, driven by a 27 percent increase in advertising. Device revenue fell 12 percent to $270 million. Overall revenue declined 2 percent to $426 million, but net income climbed to $13.8 million, up from $3.5 million a year earlier. Adjusted EBITDA rose 61 percent to $27 million.
Engagement metrics also improved. SmartCast active accounts grew 1.3 million to 17.9 million, and hours streamed jumped 21 percent to 5.15 billion. Average SmartCast hours per active account rose 12 percent to 97 per month. ARPU increased 14 percent to $31.55.
WatchFree Plus, Vizio’s free ad-supported streaming service, doubled its content catalog to 290 channels and launched nine new apps in the quarter, including ESPN and Local BTV. Platform+ revenue, gross profit and adjusted EBITDA all exceeded quarterly guidance, the company said.
