Vizio's Chief Technology Officer, Bill Baxter, outlined the strategy to The Verge during the Consumer Electronics Expo in Las Vegas, Nevada last Monday.
"This is a cutthroat industry. It's a 6% margin industry," Baxter said. "The greater strategy is I really don't need to make money off of the TV. I need to cover my cost."
More specifically, electronic manufacturers like Vizio have figured out that they can sell smart TVs at, or around cost, and concentrate on data harvesting and post-purchase monetization.
As Baxter put it: "It's not just about data collection. It's about post-purchase monetization of the TV."
He explained there are several ways to monetize smart TVs: "You sell some movies, you sell some TV shows, you sell some ads, you know."
Baxter said, without the additional forms of revenue, consumers would be paying higher premiums for smart TVs. "We'd collect a little bit more margin at retail to offset it."