The COVID-19 pandemic has fueled a shift to streaming media, creating opportunities for TV manufacturers. In late 2019, Vizio TV, one of the biggest TV makers in North America, began selling ads for streaming movies, TV shows and digital videos on its screens. It now wants to build out this new business unit to create a recurring revenue source separate from TV set sales. Sources said that Vizio’s platform revenue this year comes mostly from advertising, which appears to be on track to double year-over-year.

The Wall Street Journal reports that Vizio’s “platform business also includes Vizio’s cut of the subscription revenue generated by its platform as well as revenue from Inscape, its TV data operation.” Vizio, Samsung and other TV manufacturers still have to play catchup to “established streaming ad players — specifically, streaming device makers Roku and Amazon,” but not Apple, which “doesn’t sell its own ads on Apple TV.”

“They have some challenges to overcome, namely, a lot of the companies in this space are culturally removed from the advertising business,” said GroupM global president of business intelligence Brian Wieser.

Timing is good, since “smart TVs now account for 30 percent of ad spend going toward all Internet-connected TVs on SpotX’s platform, which helps publishers sell video ads.” The other 70 percent is comprised of “streaming boxes and sticks.” That represents tremendous growth from July 2019, when smart TVs only “accounted for 10 percent of Internet-connected TV ad spend.”

According to Vizio’s head of its platform business Mike O’Donnell, the company “is on pace to sell roughly 7 million new TV sets this year, all of which come with its SmartCast operating system through which the company offers its own free video streaming service as well as apps from TV networks and digital media companies.” He added that 90 percent of buyers activate the SmartCast OS.

“It’s very clear this is a big part of the future of the organization,” he said. “The more TVs we sell, the more we can get people to engage with us, the more money we can make.”

Growth in smart TV use is in part due to improved operating systems. Nielsen Holdings revealed that homes capable of accessing streaming services “accounted for 25 percent of consumers’ collective time spent watching TV in the second quarter of 2020, up from 19 percent in the fourth quarter of 2019.” But 77 percent of streaming usage was dominated in Q2 by Amazon, Disney+, Hulu, Netflix and YouTube.

Innovid chief technology officer Tal Chalozin stated that, “the amount of ad spend going directly to the TV makers is still relatively small.”

At Horizon Media, said chief investment officer Dave Campanelli, about 80 percent of the advertising dollars spent on streaming TV platforms (excluding deals it does directly with app publishers on those platforms) goes to Amazon and Roku, with the rest going to “TV makers selling ads.” That’s because Amazon and Roku have “large user bases,” which allow for national scale “and placements with high-quality programming.”

But Vizio and Samsung, he added, “are attractive for digital buyers looking to use audience data from the TV makers to more precisely target individual users.” “We’re definitely starting to consider them more,” said Campanelli.