Super Bowl season is one of the hottest times of the year for consumers to buy new television sets, but at least one hardware maker saw their sales momentum slump during the key retail quarter this year.
On Wednesday, electronics maker Vizio said it sold just 900,000 smart TVs during its first financial quarter (Q1) of the year, a decline of 32 percent compared to Q1 2022. The lower hardware sales resulted in a 40 percent decline in hardware-related revenue, with Vizio bringing in just $231.2 million during the period that ended March 31, compared with $382.9 million last year.
The lower sales also hampered Vizio’s device profit, which slumped 80 percent year-over-year to $1.6 million for the quarter, down from $7.9 million reported last year.
Executives at Vizio have largely turned their attention away from hardware sales and toward the growth of their platform business, which includes the development and launch of streaming apps and the licensing of content and channels for its free television service WatchFree Plus.
Platform revenue grew to $125.5 million during Q1 2023, an increase of 22 percent compared to the previous year, spurred in large part by an increase in advertisers willing to pay for inventory on the home screens of Vizio smart TV sets and during ad breaks on content streamed on WatchFree Plus.
“Q1 kicked off our 21st year of selling award-winning, affordable products and experiences, and we continue to see success in the execution of our combined hardware and software strategy,” William Wang, the CEO of Vizio, said in a statement. “As you can see from our results, our advertising business continued to show strength in Q1…which exceeded our expectations. Our results speak to the progress we’ve made in raising awareness of Vizio as a scaled destination for advertisers to reach viewers.”
But as hardware sales continue to slow, Vizio has struggled to add more eyeballs to its streaming platform and related products, which could impact growth in that part of its business over time. During its last financial quarter, the number of Platform Plus customers grew to 17.5 million — an increase of just 100,000 accounts compared to the 17.4 million reported during Q4 2022.
Vizio’s smart television sets are the only devices the company sells that are powered by its Platform Plus operating system, which allows streamers to watch content from Netflix, Amazon Prime Video, Disney Plus and dozens of other popular apps alongside free content distributed by Vizio itself.
Adam Townsend, Vizio’s chief financial officer, said customers prefer to spend time streaming content through the company’s own operating system as opposed to a third-party device like a Roku stick or Amazon Fire TV dongle.
“They spend more time on SmartCast than cable TV, game consoles, or attached media players combined,” Townsend said during a conference call with investors on Wednesday, referring to Vizio’s smart operating system by its consumer brand name. “This behavior is directly increasing our monetization opportunities in multiple ways, including our home screen advertising, video impressions, data and content distribution.”
Townsend reassured investors that as streamers continue to prefer Vizo’s native streaming platform over others, more advertisers will sign on to reach viewers through Vizio products.
“We believe we once again gain share of advertising among [connected TV] platforms, with our 24 percent growth in the first quarter,” he affirmed.