Topic: Smart TVs
Roku Said to be Preparing 2017 IPO (Jul 13, 2017)
Amazon Fire TVs Announced by Westinghouse at CES Go on Sale (May 16, 2017)
This is another example of Roku’s inevitable move into gathering more data from its devices and using those to both serve up recommendations and potentially help target advertising. Last week, I covered a piece about Roku offering to target specific demographics among its user base, and this week Roku says it’s going to track the video its users watch through the inputs to its smart TVs and offer up recommendations. Presumably, it’ll also use that data to help build profiles on users for those ad offerings. Though this article suggests it will only use this technology to track what users are watching through inputs, it can of course already see what users are watching through its smart TV interface already, so users shouldn’t assume that that activity won’t be tracked too (and likely already has been for some time). As we’ve already seen with Vizio, this kind of tracking is often non-transparent to users, as is the ability to opt out, so Roku is going down a somewhat risky path here, and one which will likely set it apart from Apple, which uses any tracking exclusively for recommendations and not for advertising purposes (Amazon’s stance here is less clear as it builds up its ad business).
Whereas the CIA / Wikileaks stories about Samsung smart TVs being hacked were somewhat overblown (they largely affected older TVs and required physical access to sets), this hack is more worrying because it would affect newer TVs and could be delivered remotely. However, for any kind of widespread effect, it would require hacking into a broadcast or IPTV stream, which in itself would be no mean feat, and of course would only work on TVs that happened to be accessing that stream during the time when it was compromised. Still, the broader worry here is, once again, that any device connected to the internet is at least theoretically vulnerable to hacking, and devices such as TVs with less sophisticated security systems than computers and smartphones are often the most vulnerable and hardest to patch.
It turns out Vizio has been collecting extremely granular data on users of its smart TVs, and then matching its IP data with offline data about individuals and households (essentially everything short of actual names). And it’s done all this without making users properly aware that this was what it was doing. The data related to everything consumers watched on the TVs, whether the content came through Vizio’s own smart TV apps or merely through one of its inputs from another box or antenna. Something I’d forgotten was that Vizio filed an S-1 in preparation to go public back in 2015 – it never actually went public because Chinese player LeEco decided to acquire them (a deal due to close shortly). Aside from talking about how many TVs the company sells, the S-1 makes a big deal of of the “up to 100 billion viewing data points daily” it collects from 8 million TVs, and touts its InScape data services, which package up this data for advertisers, although it says this data is “anonymized”, which feels like an alternative fact at this point. The risk factors in the filing even mention possible regulatory threats to such data gathering, so it’s probably fair to say that Vizio shared more information with its potential investors about the data it was collecting than it did with end users. To settle the case, Vizio has to pay a total of $3.7m in fines to the FTC and the state of New Jersey (whose AG brought the suit with the FTC), discontinue the practice, and disclose it to consumers. I can’t wait to see how it manages that last point – imagine turning on your Vizio TV one day and seeing a message pop up about the fact that it’s been tracking your every pixel for the last several years. Assuming that’s done right, it could be the most damaging part of it this for Vizio, which made over $3 billion in revenue in its most recently reported financial years. Meanwhile, yet another headache for LeEco to manage.
Amazon’s Fire TV devices have sold pretty well, but as with Alexa the company is clearly willing to license its technology to appear in third party devices too, in this case TVs sold under three brands owned by a single Chinese company, Tongfang. These aren’t the biggest brands in the market, but this is a starting point, and could lead to more meaningful partnerships in future. However, with Roku also doing well (and perhaps perceived as less of a threat for some of these companies), it’s a competitive space. Amazon, though, can also offer prime placement (no pun intended) on Amazon.com, something Roku can’t.
Roku has done well with standalone players in the past, but is also doing increasingly well in the smart TV space as a platform vendor. It claims 13% share of smart TV platforms in the US, and its TCL partnership seems to be really paying off. With Amazon also entering the market, this is going to be an increasingly competitive space, but it seems more and more TV vendors (with the notable exception of Samsung) are willing to consider outsourcing rather than owning the platform and interface.
Samsung has sold smart TVs for years, but they’ve generally been standalone devices, rather than being driven from a smartphone or app, despite an earlier project which was intended to use tablets as a remote. This new functionality looks like Chromecast, and may well be a response to competing TVs using actual Google Cast technology. As with most of Samsung’s services, though, it’s unlikely to be a big hit.