Geeks often ask for stupid TVs. But, as the CTO of Vizio recently explained, smart televisions are cheaper than stupid televisions. The TV is so cheap that the manufacturers make their profit by following your viewing habits and selling ads.
Why Smart TV is cheaper than stupid TVs
You'd think a stupid TV would be cheaper than a smart TV. After all, a stupid TV would not need the processing effect and the specialized software available on a smart TV. It can only act as a panel (like a computer monitor) and allow you to connect devices via HDMI.
So why does each TV become a smart TV?
Verge talked to Vizio CTO Bill Baxer at CES 2019. He spilled the beans:
So look, it's not just about data collection. It is about purchasing income from the TV.
This is a cutthroat industry. It's a 6% marginal industry, right? I mean, you know it's pretty ruthless. You can say that it is self-influenced, or you can say there is a bigger strategy going on here, and there it is. The bigger the strategy is, I really don't have to make money on the TV. I have to cover my cost.
This is not so bad. He continues to explain that Vizio invests in his old TVs and updates them with new software. For example, Vizio TVs dating back to 2016 will receive AirPlay support. And advertising is only part of the business model, which also includes money from movies and TV shows started from the TV.
Automatic Content Recognition Tracks What You Look For
If you never use your smart TV software, you might think it doesn't track you. You use a set-top box or a streaming stick like a Roku, Apple TV, Fire TV, Chromecast, Android TV, PlayStation 4 or Xbox One. So your smart TV's built-in software can't track you right?
Error. Modern smart TVs use a technology called "automatic content recognition" or ACR. When looking at something on any device connected to TV: yes, even if you have a device connected via HDMI, the TV takes a few pixels from what you are watching and transmits them to the TV manufacturer's servers. The servers can match it with a movie or TV show. The TV manufacturer now knows what you are watching, and it can sell that data to marketers and advertisers.
This works with any device connected to the TV, if you watch cable TV, OTA channels with an antenna or digital streams on Netflix via a streaming box.
For example, advertisers can purchase these data to get a better idea of how many people are looking at their ads. This data can be linked to your IP address, so an advertiser can know if you saw an ad on TV and then bought the product in the ad on your computer or phone.
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Smart TVs warn you, type of
 Smart TV warns you and asks for permission, in general. They can ask to track your TV viewing to give better recommendations or something vague. You can generally disable tracking if you want. But it can be confusing.
For example, to disable these things on my Vizio TV, I had to turn off "Smart Interactivity". It's a very misleading name and doesn't sound like a feature that tracks my TV viewing habits; instead, it sounds like something you want.
Vizio can pay up to $ 17 million to settle a lawsuit accusing it of tracking the viewing habits of Vizio TV owners without proper enlightenment. Modern smart TVs usually ask if you want to enable this when setting it, although most users quickly click through these messages and allow them.
It is also worth noting that this only works if the TV is connected to the Internet via Wi-Fi or Ethernet. If you never connect your smart TV to the Internet, it will not be able to upload this data, but some TV functions will not work and there will be no updates with new features like AirPlay.
What About Crapware?
This is the same type of business model found in cheap Windows laptops and Android phones. The race to the bottom has made the hardware so cheap that manufacturers have to make money in other ways than just buying.
For computers, it is "crapware", which is additional software that comes pre-installed on the computer. PC manufacturers are paid to install this junk. Crapware includes free trials for antivirus products that nail you to pay so nothing bad happens to your computer.
Modern smart TV producers collect data on what you are looking at, selling ads and earning an average when you rent digital movies and TV shows.
Of course, it's not the only revenue streams. Smart TV manufacturers can be paid to pre-install TV service apps and place them on the front and center. Some TV remote controls have dedicated buttons for Netflix and other services. These services have generally paid money to get on that remote control.
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