Similarly, the report’s authors describe concerns that the CTV industry’s extensive data collection and tracking could potentially have a political impact. It asserts that political candidates could use such data to run “covert personalized campaigns” leveraging information on things like political orientations and “emotional states”:
With no transparency or oversight, these practices could unleash millions of personalized, manipulative and highly targeted political ads, spread disinformation, and further exacerbate the political polarization that threatens a healthy democratic culture in the US.
“Potential discriminatory impacts”
The CDD’s report claims that Black, Hispanic, and Asian-Americans in the US are being “singled out by marketers as highly lucrative targets,” due to fast adoption of new digital media services and brand loyalty. Black and Hispanic communities are key advertising targets for FAST channels, per the report. Chester told Ars:
There are major potential discriminatory impacts from CTV’s harvesting of data from communities of color.
He pointed to “growing widespread racial and ethnic data” collection for ad targeting and marketing.
“We believe this is sensitive information that should not be applied to the data profiles used for targeting on CTV and across other platforms. … Its use in political advertising on CTV will enable widespread disinformation and voter suppression campaigns targeting these communities,” Chester said.
Regulation
In a letter sent to the FTC, FCC, California attorney general, and CPPA , the CDD asked for an investigation into the US’ CTV industry, “including on antitrust, consumer protection, and privacy grounds.” The CDD emphasized the challenges that streamers—including those who pay for ad-free streaming—face in protecting their data from advertisers.
“Connected television has taken root and grown as an unregulated medium in the United States, along with the other platforms, devices, and applications that are part of the massive internet industry,” the report says.
The group asks for the FTC and FCC to investigate CTV practices and consider building on current legislation, like the 1988 Video Privacy Protection Act. They also request that antitrust regulators delve deeply into the business practices of CTV players like Amazon, Comcast, and Disney to help build “competition and diversity in the digital and connected TV marketplace.”
Last month, Ars Technica went on a deep dive into the rapid growth of ads in TV software. Less than three weeks later, LG announced that it was adding advertisements to its TVs’ screensavers. The move embodies how ads are a growing and virtually inescapable part of the TV-viewing experience—even when you’re not watching anything.
As you might have expected, LG didn’t make a big, splashy announcement to consumers or LG TV owners about this new ad format. Instead, and ostensibly strategically, the September 5 announcement was made to advertisers. LG appears to know that screensaver ads aren’t a feature that excites users. Still, it and many other TV makers are happy to shove ads into the software of already-purchased devices.
LG TV owners may have already spotted the ads or learned about them via FlatpanelsHD, which today reported seeing a full-screen ad on the screensaver for LG’s latest flagship TV, the G4. “The ad appeared before the conventional screensaver kicks in,” per the website, “and was localized to the region the TV was set to.” (You can see images that FlatpanelsHD provided of the ads here, here, and here.) The reviewer reported seeing an ad for LG’s free ad-supported streaming channel, LG Channels, as well as third-party ads.
LG has put these ads on by default, according to FlatpanelsHD, but you can disable them in the TVs’ settings. Still, the introduction of ads during a screensaver, shown during a pause in TV viewing that some TVs use as an opportunity to show art or personal photos that amplify the space, illustrates the high priority that ad dollars and tracking have among today’s TVs—even new top-of-the-line ones.
According to LG’s ads arm, LG AD Solutions, the screensaver ads activate “across the home screen, LG Channels, and Content Store on LG smart TVs.” The point is to capitalize “on idle screen time, turning what may be perceived as a period of downtime into a valuable engagement opportunity.” LG AD Solutions claims that it has commissioned testing showing that screensaver ads drive “on average a 2.5 times higher lift in brand awareness.”
In a statement, LG AD Solutions CTO Dave Rudnick seemed to acknowledge that people whose TVs are showing screensavers are often trying to do something other than look at adverts.
“In the past, a screensaver ad might have indicated that viewers had left the room, but today’s viewing habits are markedly different,” he said. “Now, 93 percent of viewers multitask while watching TV, engaging in activities like messaging, shopping, browsing social media, or playing games on their phones.”
TV advertising: The next generation
The addition of screensaver ads that users can disable may sound like a comparatively smaller disruption as far as TV operating system (OS) ads go. But the incorporation of new ad formats into TV OSes’ various nooks and crannies is a slippery slope. Some TV brands are even centered more on ads than selling hardware. Unfortunately, it’s up to OS operators and TV OEMs to decide where the line is, including for already-purchased TVs. User and advertiser interests don’t always align, making TV streaming platforms without third-party ads, such as Apple TV, increasingly scarce gems.
LG has been expanding its business for selling and tracking ads shown on LG TVs. It has a partnership with Nielsen that sends automatic content-recognition data gathered from LG TVs to Nielsen, for example. Additionally, LG has boasted of plans to evolve from a hardware business into a “media and entertainment platform,” which includes selling ads. The South Korean company has also expressed strong interest in shopable TV ads.
For its part, LG’s growing ad interests have led it to launch a new LG Ad Solutions division this month that’s focused on developing new ways to show ads to and track smart TV users. In a statement, Rudnick said Innovation Labs is seeking to “push the boundaries” of smart-TV advertising and drive “next-generation advertising,” including interactive ads, on smart TVs.
LG is adapting to a changing market
LG claims to have done its homework before deciding to inject ads into its TVs’ screensavers. LG Ad Solutions-commissioned research, which was reportedly conducted and measured by Lucid, a consumer market research firm, found that screensaver ads increase brand awareness, especially among adults 45 and up and women with a household income greater than $80,000 (assumedly annually).
LG’s ads push comes as it’s challenged to continue finding revenue and growth from its TV business while TVs get more advanced and reliable and are able to get new features via software updates. Meanwhile, advertisers are challenged to find ways to continue reaching TV viewers in a world shifting from linear TV to streaming and web-based entertainment that’s often sold with the option of being commercial-free. Although lower-priced TVs, like those running Roku OS, may have a reputation for more ads, they’re also doing well in the market.
Market conditions and changing TV users’ habits are forcing LG to adapt the way it makes money from TVs. Unfortunately for those adverse to ads, that means pushing more commercials and finding better ways to track viewers.
Hundreds of owners of smart TVs and streaming devices from United Kingdom telecom Sky reported that their hardware stopped powering on Thursday. Sky hasn’t confirmed the cause of the problem, but a botched update is largely suspected.
Sky, a Comcast company that sells Internet, mobile, and satellite TV service in the UK, got into the streaming hardware business in 2021. Its proprietary Glass TVs and Stream pucks let people access TV channels offered through Sky via the Internet instead of a dish. As of this writing, Glass TVs range from 600 pounds (about $800) for a 43-inch set to 1,199 pounds (about $1,600) for 65 inches and include quantum dots and Dolby Vision, HDR10, and HLG HDR support. To order a Glass TV, people have to sign up for a Sky Entertainment subscription that includes the same type of channels offered through Sky’s satellite TV services but via streaming, plus Netflix (with or without ads). If you don’t buy/renew your Sky Entertainment subscription, “access to TV apps like Netflix won’t be available,” Sky says. The Stream puck, meanwhile, supports various streaming apps but doesn’t work without a Sky subscription.
As of yesterday, paying subscribers and owners of Glass and Stream devices reported that their devices were unable to power on. Users reported only being able to see a blank screen, with some saying the problems lasted for hours.
As noted by the BBC, problems started on Thursday night. Per Downdetector, the situation seemed to peak at around 3: 10 pm UTC with 377 incidents reported, but the overall number of affected devices could vary. A thread on Sky’s community forum about the problem is currently 141 pages long.
This morning, some people were still complaining about broken devices online; although, some reported that their devices were functioning again. As of this writing, DownDetector is showing 142 reported incidents.
With no TV to watch, Glass and Stream users had plenty of time to go online to try to troubleshoot with each other and share their disappointment in Sky. Some have called for Sky to pay for the cost of a new TV, while others are wondering if they will get financial compensation for their troubles. Sky hasn’t made any public mention of refunds or credits, though.
A user going by larky+marky on Sky’s community forum wrote:
What a total lump of st.
I have been thinking of cancelling my subscription altogether, so now this has made my mind up.
Yesterday, a Twitter user claimed that their TV was bricked “for the best part of 11 hours.” The user, going by MattHudson81, wrote, “We pay a lot of money each month for the use of your services and understand at times faults happen, but 11 hours so far with no end in sight, it’s not good.”
On Sky’s support forum, an employee said that Sky was working on the problem throughout Thursday night. “We continue to work on the problem in the background,” the employee going by KevNewMedia wrote today.
Sky also acknowledged the problems on Thursday via its Twitter account, saying:
Some Sky Glass/Stream customers are currently experiencing technical issues when trying to switch on their devices. Our technical teams are working hard to fix this. We’re sorry for any inconvenience caused.
Today, the Twitter account posted another apology along with a link to a support page with steps for getting the hardware to work (basically by resetting it). However, at least some people on Sky’s support forum have said that the fix hasn’t worked for them.
“Yet this isn’t working for everyone though. You’re essentially just tell[ing] people to turn it on and off again,” PaulRC1963 wrote. “Sky is acting very incompetent.”
Sky hasn’t confirmed the cause
Sky declined to answer questions from the BBC about the cause of the problems or when they’d be totally resolved. Without further explanation, a poorly executed software update issued via the Internet seems to be the most obvious reason for hundreds of people concurrently reporting broken devices.
The situation, which led to missed sporting events and hours of boredom, is a reminder of the risks of buying hardware from companies, like ISPs, that aren’t traditionally in the technology game. Sky first unveiled its Glass TVs in 2021, ostensibly as an attempt to save its business amid a massive shift to streaming over satellite dishes and cable and to drive subscription revenue. It’s possible that in its haste to jump on the streaming bandwagon, it has overlooked some of the intricacies and complexities in mass, web-issued updates. Notably, Sky’s set-top boxes have reportedly been unaffected.
If a botched update didn’t break the smart TVs and streaming sticks, it would be prudent of Sky to inform customers of the root of the problem. Otherwise, it can be hard for customers to have confidence that the problems won’t repeat and that their subscriptions and Sky hardware are worthwhile.
Enlarge/ A promotional image for Amazon’s 4-Series Fire TVs.
A lawsuit is seeking to penalize Amazon for allegedly providing “fake list prices and purported discounts” to mislead people into buying Fire TVs.
As reported by Seattle news organization KIRO 7, a lawsuit seeking class-action certification and filed in US District Court for the Western District of Washington on September 12 [PDF] claims that Amazon has been listing Fire TV and Fire TV bundles with “List Prices” that are higher than what the TVs have recently sold for, thus creating “misleading representation that customers are getting a ‘Limited time deal.'” The lawsuit accuses Amazon of violating Washington’s Consumer Protection Act.
The plaintiff, David Ramirez, reportedly bought a 50-inch 4-Series Fire TV in February for $299.99. The lawsuit claims the price was listed as 33 percent off and a “Limited time deal” and that Amazon “advertised a List Price of $449.99, with the $449.99 in strikethrough text.” As of this writing, the 50-inch 4-Series 4K TV on Amazon is marked as having a “Limited time deal” of $299.98.
Camelcamelcamel, which tracks Amazon prices, claims that the cheapest price of the TV on Amazon was $280 in July. The website also claims that the TV’s average price is $330.59; the $300 or better deal seems to have been available on dates in August, September, October, November, and December of 2023, as well as in July, August, and September 2024. The TV was most recently sold at the $449.99 “List Price” in October 2023 and for short periods in July and August 2024, per Camelcamelcamel.
Enlarge/ The 50-inch 4-Series Fire TV’s Amazon price history, according to Camelcamelcamel.
Amazon’s website has an information icon next to “List Prices” that, when hovered over, shows a message stating: “The List Price is the suggested retail price of a new product as provided by a manufacturer, supplier, or seller. Except for books, Amazon will display a List Price if the product was purchased by customers on Amazon or offered by other retailers at or above the List Price in at least the past 90 days. List prices may not necessarily reflect the product’s prevailing market price.”
The lawsuit against Amazon alleges that Amazon is claiming items were sold at their stated List Price within 90 days but were not:
… this representation is false and misleading, and Amazon knows it. Each of the Fire TVs in this action was sold with advertised List Price that were not sold by Amazon at or above those prices in more than 90 days, making the above statement, as well as the sales prices and percentage discounts, false and misleading. As of September 10, 2024, most of the Fire TVs were not sold at the advertised List Prices since 2023 but were instead consistently sold well below (often hundreds of dollars below) the List Prices during the class period.
When contacted by Ars Technica, an Amazon spokesperson said that the company doesn’t comment on ongoing litigation.
The lawsuit seeks compensatory and punitive damages and an injunction against Amazon.
“Amazon tricks its customers”
The lawsuit claims that “misleading” List Prices harm customers while also allowing Amazon to create a “false” sense of urgency to get a discount. The lawsuit alleges that Amazon has used misleading practices for 15 Fire TV models/bundles.
The lawsuit claims that in some cases, the List Price was only available for “an extremely short period, in some instances as short as literally one day.“
The suit reads:
Amazon tricks its customers into buying Fire TVs by making them believe they are buying Fire TVs at steep discounts. Amazon omits critical information concerning how long putative “sales” would last, and when the List Prices were actually in use, which Plaintiff and class members relied on to their detriment. Amazon’s customers spent more money than they otherwise would have if not for the purported time-limited bargains.
Further, Amazon is accused of using these List Price tactics to “artificially” drive Fire TV demand, putting “upward pressure on the prices that” Amazon can charge for the smart TVs.
The legal document points to a similar 2021 case in California [PDF], where Amazon was sued for allegedly deceptive reference prices. It agreed to pay $2 million in penalties and restitution.
Other companies selling electronics have also been scrutinized for allegedly making products seem like they typically and/or recently have sold for more money. For example, Dell Australia received an AUD$10 million fine (about $6.49 million) for “making false and misleading representations on its website about discount prices for add-on computer monitors,” per the Australian Competition & Consumer Commission.
Now’s a good time to remind friends and family who frequently buy tech products online to use price checkers like Camelcamelcamel and PCPartPicker to compare products with similar specs and features across different retailers.
Enlarge/ TCL’s C655 Pro TV is advertised as a quantum dot Mini LED TV.
TCL has come under scrutiny this month after testing that claimed to examine three TCL TVs marketed as quantum dot TVs reportedly showed no trace of quantum dots.
Quantum dots are semiconductor particles that are several nanometers large and emit different color lights when struck with light of a certain frequency. The color of the light emitted by the quantum dot depends on the wavelength, which is impacted by the quantum dot’s size. Some premium TVs (and computer monitors) use quantum dots so they can display a wider range of colors.
Quantum dots have become a large selling point for LCD-LED, Mini LED, and QD-OLED TVs, and quantum dot TVs command higher prices. A TV manufacturer pushing off standard TVs as quantum dot TVs would create a scandal significant enough to break consumer trust in China’s biggest TV manufacturer and could also result in legal ramifications.
But with TCL sharing conflicting testing results, and general skepticism around TCL being able to pull off such an anti-consumer scam in a way that would benefit it financially, this case of questionable colorful TVs isn’t so black and white. So, Ars Technica sought more clarity on the situation.
Tests unable to detect quantum dots in TCL TVs
Earlier this month, South Korean IT news publication ETNews published a report on testing that seemingly showed three TCL quantum dot TVs, marketed as QD TVs, as not having quantum dots present.
Hansol Chemical, a Seoul-headquartered chemicals company, commissioned the testing. SGS, a Geneva-headquartered testing and certification company, and Intertek, a London-headquartered testing and certification company, performed the tests.
The models examined were TCL’s C755, said to be a quantum dot Mini LED TV, the C655, a purported quantum dot LED (QLED) TV, and the C655 Pro, another QLED. None of those models are sold in the US, but TCL sells various Mini LED and LED TVs in the US that claim to use quantum dots.
According to a Google translation, ETNews reported: “According to industry sources on the 5th, the results of tests commissioned by Hansol Chemical to global testing and certification agencies SGS and Intertek showed that indium… and cadmium… were not detected in three TCL QD TV models. Indium and cadmium are essential materials that cannot be omitted in QD implementation.”
The testing was supposed to detect cadmium if present at a minimum concentration of 0.5 mg per 1 kg, while indium was tested at a minimum detection standard of 2 mg/kg or 5 mg/kg, depending on the testing lab.
These are the results from Intertek and SGS’s testing, as reported by display tech publication Display Daily:
Enlarge/ A Samsung representative demonstrating Tizen OS in February.
Samsung
Samsung will provide operating system updates for its newer TVs for at least seven years, the company announced last week. The updates will first apply to some TVs released in 2023 and TVs released in March 2024.
According to Business Korea, Samsung made the announcement regarding the Tizen OS at the Digital Research Lab of Samsung Electronics’ Suwon Campus in Gyeonggi Province. As spotted by FlatPanelsHD, the announcement follows previously announced plans from Samsung to provide seven years of software updates for the Galaxy S24 smartphone series.
Per Korea Economic Daily, speaking at last week’s event, Samsung Electronics’ president of the Visual Display Business Division, Yoon Seok-Yoon, said: “With the seven-year free upgrade of Tizen applied to AI TVs, we will widen the gap in market share with Chinese companies.”
Samsung is the biggest smart TV seller in the world, but rival companies from China are close behind. According to numbers from Omdia, Samsung’s TV market share (based on units shipped) declined from 20.3 percent in Q1 2023 to 18.8 percent in Q1 2024. Market share for Chinese brand TCL, meanwhile, increased from 9.8 percent to 11.6 percent (LG’s market share was about flat at 11.8 percent in Q1 2024).
Market competition has gotten so fierce that the South Korean government reportedly pushed rivals Samsung and LG to cooperate so that they could stay competitive. This has resulted in Samsung selling TVs that use OLED panels made by LG Display.
Samsung hasn’t provided a specific list of each model guaranteed to receive seven years of updates. However, the company’s announcement suggests the news will apply to TVs with AI-based features that came out in the aforementioned release window. (Samsung has been pushing the term “AI TVs” lately and also says building AI features is also a way for it to compete against Chinese brands.)
A step in the right direction
Samsung’s upgrades commitment comes amid growing concern about e-waste and expensive products suddenly no longer getting software updates, resulting in bricked, slowly operating, or buggy experiences.
Research suggests that the average TV lasts about seven years. However, as UK consumer advocacy group Which? has found, the average TV brand offers software updates for less than seven years. With Samsung being the world’s biggest TV brand, offering longer-term software support could encourage more in the industry to do the same. It could also help users keep their devices for longer. Samsung’s seven-year commitment is longer than what LG recently announced it would offer, which is four OS updates over five years (you can see LG’s webOS update plan here).
However, other TV hardware companies are doing better. Apple has provided updates for its first Apple TV since 2015, FlatPanelsHD pointed out, while Roku’s still providing OS updates to Roku OS-based TVs released in 2014. However, in general, TV OEMs and streaming device makers could make it easier for prospective buyers to know how long a device will continue getting software updates before they buy it.
The TV business isn’t just about selling TVs anymore. Companies are increasingly seeing viewers, not TV sets, as their most lucrative asset.
Over the past few years, TV makers have seen rising financial success from TV operating systems that can show viewers ads and analyze their responses. Rather than selling as many TVs as possible, brands like LG, Samsung, Roku, and Vizio are increasingly, if not primarily, seeking recurring revenue from already-sold TVs via ad sales and tracking.
How did we get here? And what implications does an ad- and data-obsessed industry have for the future of TVs and the people watching them?
The value of software
Success in the TV industry used to mean selling as many TV sets as possible. But with smart TVs becoming mainstream and hardware margins falling, OEMs have sought new ways to make money. TV OS providers can access a more frequent revenue source at higher margins, which has led to a viewing experience loaded with ads. They can be served from the moment you pick up your remote, which may feature streaming service ads in the form of physical buttons.
Some TV brands already prioritize data collection and the ability to sell ads, and most are trying to boost their appeal to advertisers. Smart TV OSes have become the cash cow of the TV business, with providers generating revenue by licensing the software and through revenue sharing of in-app purchases and subscriptions.
A huge part of TV OS revenue comes from selling ads, including on the OS’s home screen and screensaver and through free, ad-supported streaming television channels. GroupM, the world’s largest media investment company, reported that smart TV ad revenue grew 20 percent from 2023 to 2024 and will grow another 20 percent to reach $46 billion next year. In September 2023, Patrick Horner, practice leader of consumer electronics at analyst Omdia, reported that “each new connected TV platform user generates around $5 per quarter in data and advertising revenue.”
Automatic content recognition (ACR) tech is at the heart of the smart TV ads business. Most TV brands say users can opt out of ACR, but we’ve already seen Vizio take advantage of the feature without user permission. ACR is also sometimes turned on by default, and the off switch is often buried in a settings menu. Including ACR on a TV at all says a lot about a TV maker’s priorities. Most users have almost nothing to gain from ACR and face privacy concerns by sharing information—sometimes in real time—about what they do with their TVs.
At this point, consumers have come to expect ads and tracking on budget TVs from names like Vizio or Roku. But the biggest companies in TV are working on turning their sets into data-prolific billboards, too.
When TVs watch you back, so do corporations
In recent years, we’ve seen companies like LG and Samsung increase their TVs’ ad capabilities as advertisers become more eager to access tracking data from TVs.
LG, for example, started sharing data gathered from its TVs with Nielsen, giving the data and market measurement firm “the largest ACR data footprint in the industry,” according to an October announcement. The deal gives Nielsen streaming and linear TV data from LG TVs and provides firms buying ads on LG TVs with “‘Always On’ streaming measurement and big data from LG Ad Solutions” via Nielsen’s ONE Ads dashboard.
LG, which recently unveiled a goal of evolving its hardware business into an ad-pushing “media and entertainment platform company,” expects there to be 300 million webOS TVs in homes by 2026. That represents a huge data-collection and recurring-revenue opportunity. In September, LG said it would invest 1 trillion KRW (about $737.7 million) through 2028 into its “webOS business,” or the business behind its smart TV OS. The company said updates will include improving webOS’s UI, AI-based recommendations, and search capabilities.
Similarly, Samsung recently updated its ACR tech to track exposure to ads viewed on its TVs via streaming services instead of just from linear TV. Samsung is also trying to make its ACR data more valuable for ad targeting, including through a deal signed in December with analytics firm Experian.
Representatives for LG and Samsung declined to comment to Ars Technica about how much of their respective company’s business is ad sales. But the deals they’ve made with data-collection firms signal big interest in turning their products into lucrative smart TVs. In this case, “smart” isn’t about Internet connectivity but rather how well the TV understands its viewer.
Roku CEO Anthony Wood disclosed plans to introduce video ads to the Roku OS home screen. The news highlights Roku’s growing focus on advertising and an alarming trend in the streaming industry that sees ads increasingly forced on viewers.
As spotted by The Streamable, during Roku’s Q1 2024 earnings call last week, Wood, also the company’s founder and chairman, boasted about the Roku OS home screen showing users ads “before they select an app,” avoiding the possibility that they don’t see any ads during their TV-viewing session. (The user might only use Roku to access a video streaming app for which they have an ad-free subscription.)
Wood also noted future plans to make the Roku home screen even more ad-laden:
On the home screen today, there’s the premier video app we call the marquee ad and that ad traditionally has been a static ad. We’re going to add video to that ad. So that’ll be the first video ad that we add to the home screen. That will be a big change for us.
Wood’s comments didn’t address the expected impact on the Roku user experience or whether the company thinks this might turn people off its platform. In December, Amazon made a similar move by adding autoplay video ads to the home screen of the Fire OS (which third-party TVs and Amazon-branded Fire TV sets and streaming devices use). Fire OS users who disable the ads’ autoplay function will still see ads as “a full-screen slide show of image ads,” per AFTVnews. Some users viewed the introduction as an intrusive step that went too far, and Roku may hear the same feedback.
During Roku’s earnings call, Wood also said the company is testing “other types of video ad units” and is looking for more ways to bring advertising to the Roku OS home screen.
This comes after recent efforts to expand ad presence on Roku OS, including through new FAST (free ad-supported streaming TV) channels and by putting content recommendations on the home screen for the first time, per Wood, who said the personalized content row “will be, obviously, AI-driven recommendations.”
“There’s lots of ways we’re working on enhancing the home screen to make it more valuable to viewers but also increase the monetization on the home screen,” he said.
Roku’s revenue rise
Roku saw its average revenue per user (ARPU) drop from $41.03 in Q3 of its 2023 financial year to $39.92 in Q4 2023 (in Q4 2022, the company reported an ARPU of $41.68). Last week, Roku reported that ARPU, a key metric for the streaming industry these days, rose to $40.65 in Q1 2024. Meanwhile, Roku’s active account count rose by 1.6 million users from the prior quarter to 81.6 million.
“Roku has a direct relationship with more than 81 million Streaming Households, and we are deepening relationships with third-party platforms, including [demand side platforms], retail media networks, and measurement partners. Our business remains well positioned to capture the billions of dollars in traditional TV ad budgets that will shift to streaming,” an April 25 letter to shareholders [PDF] authored by Wood and Roku CFO Dan Jedda reads.
Like many streaming companies, a shift toward ads has resulted in higher revenue potential and user discontent. In its Q1 2024 results, Roku reported that revenue for its Devices business reached $126.5 million, compared to $754.9 for its Platform business, which drives most of its revenue through ad sales, representing a 19 percent year-over-year (YoY) increase. Overall, revenue rose 19 percent YoY to $882 million, and Roku’s gross profit grew 15 percent YoY to $388 million.
But growing revenue doesn’t equate to an improved user experience. For example, an Accenture survey of 6,000 “global consumers” noted by The Streamable found that 52.2 percent of participants thought that streaming platform-recommended content “did not match their interests.” Similarly, an October TiVo survey of 4,500 viewers in the US and Canada ranked “streaming apps / home screen / carousel ads” as the fourth most popular method of content discovery, after word of mouth, commercials aired during other shows, and social media. While Roku is a budget brand associated with more affordable TVs and streaming devices, excessive ads could make people reconsider the true price of these savings.
Despite people’s ad aversion, Roku intends to find more ways to drive advertising opportunities. Among those ideas being explored is the ability to show ads over anything plugged into the TV.
As many as 91,000 LG TVs face the risk of being commandeered unless they receive a just-released security update patching four critical vulnerabilities discovered late last year.
The vulnerabilities are found in four LG TV models that collectively comprise slightly more than 88,000 units around the world, according to results returned by the Shodan search engine for Internet-connected devices. The vast majority of those units are located in South Korea, followed by Hong Kong, the US, Sweden, and Finland. The models are:
Starting Wednesday, updates are available through these devices’ settings menu.
Got root?
According to Bitdefender—the security firm that discovered the vulnerabilities—malicious hackers can exploit them to gain root access to the devices and inject commands that run at the OS level. The vulnerabilities, which affect internal services that allow users to control their sets using their phones, make it possible for attackers to bypass authentication measures designed to ensure only authorized devices can make use of the capabilities.
“These vulnerabilities let us gain root access on the TV after bypassing the authorization mechanism,” Bitdefender researchers wrote Tuesday. “Although the vulnerable service is intended for LAN access only, Shodan, the search engine for Internet-connected devices, identified over 91,000 devices that expose this service to the Internet.”
The key vulnerability making these threats possible resides in a service that allows TVs to be controlled using LG’s ThinkQ smartphone app when it’s connected to the same local network. The service is designed to require the user to enter a PIN code to prove authorization, but an error allows someone to skip this verification step and become a privileged user. This vulnerability is tracked as CVE-2023-6317.
Once attackers have gained this level of control, they can go on to exploit three other vulnerabilities, specifically:
CVE-2023-6318, which allows the attackers to elevate their access to root
CVE-2023-6319, which allows for the injection of OS commands by manipulating a library for showing music lyrics
CVE-2023-6320, which lets an attacker inject authenticated commands by manipulating the com.webos.service.connectionmanager/tv/setVlanStaticAddress application interface.
Enlarge/ AMD’s depiction of a game playing without FreeSync (left) and with FreeSync (right).
AMD announced this week that it has ceased FreeSync certification for monitors or TVs whose maximum refresh rates are under 144 Hz. Previously, FreeSync monitors and TVs could have refresh rates as low as 60 Hz, allowing for screens with lower price tags and ones not targeted at serious gaming to carry the variable refresh-rate technology.
AMD also boosted the refresh-rate requirements for its higher AdaptiveSync tiers, FreeSync Premium and FreeSync Premium Pro, from 120 Hz to 200 Hz.
Here are the new minimum refresh-rate requirements for FreeSync, which haven’t changed for laptops.
Laptops
Monitors and TVs
FreeSync
Max refresh rate: 40-60 Hz
< 3440 Horizontal resolution: Max refresh rate: ≥ 144 Hz
FreeSync Premium
Max refresh rate: ≥ 120 Hz
< 3440 Horizontal resolution: Max refresh rate: ≥ 200 Hz≥ 3440 Horizontal resolution: Max refresh rate: ≥ 120 Hz
FreeSync Premium Pro
FreeSync Premium requirements, plus FreeSync support with HDR
FreeSync Premium requirements, plus FreeSync support with HDR
AMD will continue supporting already-certified FreeSync displays even if they don’t meet the above requirements.
Interestingly, AMD’s minimum refresh-rate requirements for TVs go beyond 120 Hz, which many premium TVs currently max out at, due to the current-generation Xbox and PlayStation supporting max refresh rates of 120 frames per second (FPS).
Announcing the changes this week in a blog post, Oguzhan Andic, AMD FreeSync and Radeon product marketing manager, claimed that the changes were necessary, noting that 60 Hz is no longer “considered great for gaming.” Andic wrote that the majority of gaming monitors are 144 Hz or higher, compared to in 2015, when FreeSync debuted, and even 120 Hz was “a rarity.”
Since 2015, refresh rates have climbed ever higher, with the latest sports targeting competitive players hitting 500 Hz, with display stakeholders showing no signs of ending the push for more speed. Meanwhile, FreeSync cemented itself as the more accessible flavor of Adaptive Sync than Nvidia’s G-Sync, which for a long time required specific hardware to run, elevating the costs of supporting products.
AMD’s announcement didn’t address requirements for refresh-rate ranges. Hopefully, OEMs will continue making FreeSync displays, especially monitors, that can still fight screen tears when framerates drop to the double digits.
The changes should also elevate the future price of entry for a monitor or TV with FreeSync TV. Sometimes the inclusion of FreeSync served as a differentiator for people seeking an affordable display and who occasionally do some light gaming or enjoy other media with fast-paced video playback. FreeSync committing itself to 144 Hz and faster screens could help the certification be aligned more with serious gaming.
Meanwhile, there is still hope for future, slower screens to get certification for variable refresh rates. In 2022, the Video Electronics Standards Association (VESA) released its MediaSync Display for video playback and AdaptiveSync for gaming, certifications that have minimum refresh-rate requirements of 60 Hz. VESA developed the lengthy detailed certifications with its dozens of members, including AMD (a display could be MediaSync/AdaptiveSync and/or FreeSync and/or G-Sync certified). In addition to trying to appeal to core gamers, it’s possible that AMD also sees the VESA certifications as more appropriate for slower displays.
Roku customers are threatening to stop using, or to even dispose of, their low-priced TVs and streaming gadgets after the company appears to be locking devices for people who don’t conform to the recently updated terms of service (ToS).
This month, users on Roku’s support forums reported suddenly seeing a message when turning on their Roku TV or streaming device reading: “We’ve made an important update: We’ve updated our Dispute Resolution Terms. Select ‘Agree’ to agree to these updated Terms and to continue enjoying our products and services. Press to view these updated Terms.” A large button reading “Agree” follows. The pop-up doesn’t offer a way to disagree, and users are unable to use their device unless they hit agree.
Customers have left pages of complaints on Roku’s forum. One user going by “rickstanford” said they were “FURIOUS!!!!” and expressed interest in sending their reported six Roku devices back to the company since “apparently I don’t own them despite spending hundreds of dollars on them.”
Another user going by Formercustomer, who, I suspect, is aptly named, wrote:
So, you buy a product, and you use it. And they want to change the terms limiting your rights, and they basically brick the device … if you don’t accept their new terms. … I hope they get their comeuppance here, as this is disgraceful.
Roku has further aggravated customers who have found that disagreeing to its updated terms is harder than necessary. Roku is willing to accept agreement to its terms with a single button press, but to opt out, users must jump through hoops that include finding that old book of stamps.
To opt out of Roku’s ToS update, which primarily changes the “Dispute Resolution Terms,” users must send a letter to Roku’s general counsel in California mentioning: “the name of each person opting out and contact information for each such person, the specific product models, software, or services used that are at issue, the email address that you used to set up your Roku account (if you have one), and, if applicable, a copy of your purchase receipt.” Roku required all this to opt out of its terms previously, as well.
But the new update means that while users read this information and have their letter delivered, they’re unable to use products they already paid for and used, in some cases for years, under different “dispute resolution terms.”
“I can’t watch my TV because I don’t agree to the Dispute Resolution Terms. Please help,” a user going by Campbell220 wrote on Roku’s support forum.
Based on the ToS’s wording, users could technically choose to agree to the ToS on their device and then write a letter saying they’d like to opt out. But opting into an agreement only to use a device under terms you don’t agree with is counterintuitive.
Even more pressing, Roku’s ToS states that users only have “within 30 days of you first becoming subject to” Roku’s updated terms, which was February 20, to opt out. Otherwise, you’re opted in automatically.
Archived records of Roku’s ToS website seem to show the new ToS being online since at least August. But it was only this month that users reported that their TVs were useless unless they accepted the terms via an on-screen message. Roku declined to answer Ars Technica’s questions about the changes, including why it didn’t alert users about them earlier. But a spokesperson shared a statement saying:
Like many companies, Roku updates its terms of service from time to time. When we do, we take steps to make sure customers are informed of the change.
What Roku changed
Customers are criticizing Roku for aggressively pushing them to accept ToS changes. The updates focus on Roku’s terms for dispute resolution, which prevent users from suing Roku. The terms have long forced a described arbitration process for dispute resolution. The new ToS is more detailed, including specifics for “mass arbitrations.” The biggest change is the introduction of a section called “Required Informal Dispute Resolution.” It states that except for a small number of described exceptions (which include claims around intellectual property), users must make “a good-faith effort” to negotiate with Roku, or vice versa, for at least 45 days before entering arbitration.
Roku is also taking heat for using forced arbitration at all, which some argue can have one-sided benefits. In a similar move in December, for example, 23andMe said users had 30 days to opt out of its new dispute resolution terms, which included mass arbitration rules (the genetics firm let customers opt out via email, though). The changes came after 23andMe user data was stolen in a cyberattack. Forced arbitration clauses are frequently used by large companies to avoid being sued by fed-up customers.
Roku’s forced arbitration rules aren’t new but are still making customers question their streaming hardware, especially considering that there are rivals, like Amazon, Apple, and Google, that don’t force arbitration on users.
Based on comments in Roku’s forums, some users were unaware they were already subject to arbitration rules and only learned this as a result of Roku’s abrupt pop-up.
But with the functionality of already-owned devices blocked until users give in, Roku’s methods are questionable, and Roku may lose customers over it. Per an anonymous user on Roku’s forum:
Walmart announced an agreement to buy Vizio today. Irvine, California-based Vizio is best known for lower-priced TVs, but its real value to Walmart is its advertising business and access to user data.
Walmart said it’s buying Vizio for approximately $2.3 billion, pending regulatory clearance and additional closing conditions. Vizio can also terminate the transaction over the next 45 days if it accepts a better offer, per the announcement.
Walmart will keep selling non-Vizio TVs should the merger close, Seth Dallaire, Walmart US’s EVP and CRO who would manage Vizio post-acquisition, told The Wall Street Journal (WSJ).
Walmart expects the acquisition to be finalized as soon as this summer, it told WSJ.
Ad-pportunity
Walmart, including Sam’s Club, is typically Vizio’s biggest customer by sales, per a WSJ report last week on the potential merger. But Walmart’s acquisition isn’t about getting a bigger piece of the budget-TV market (Walmart notably already sells its own “onn.” budget TVs). Instead, Walmart is looking to boost its Walmart Connect advertising business.
Vizio makes money by selling ads, including those shown on the Vizio SmartCast OS and on free content available on its TVs with ads. Walmart said buying Vizio will give it new ways to appeal to advertisers and that those ad efforts would be further fueled by Walmart’s high-volume sales of TVs.
Walmart said today that Vizio’s Platform+ ad business has “over 500 direct advertiser relationships, including many of the Fortune 500” and that SmartCast users have grown 400 percent since 2018 to 18 million active accounts.
Walmart Connect (which was rebranded from Walmart Media Group in 2021) sells various types of ads, including adverts that appear on Walmart’s website and app. Walmart Connect also sells ads that display on in-store screens, including display TVs and point-of-sale machines, in over 4,700 locations (Walmart has over 10,500 stores).
Walmart makes most of its US revenue from low-profit groceries, WSJ noted last week, but ads are higher profit. Walmart has said that it wants Walmart Connect to be a top-10 advertising business. Alphabet, Amazon, and Meta are among the world’s biggest advertising companies today. In the fiscal year ending January 2023, Walmart said that its global ads business represented under 1 percent ($2.7 billion) of its total annual revenue. In its fiscal year 2024 Q4 earnings report released today [PDF], Walmart said its global ad business grew 33 percent, including 22 percent in the US, compared to Q4 2023.
Hungry for customer data
Owning Platform+ would give Walmart new information about TV users. Data gathered from Vizio TVs will be combined with data on shoppers that Walmart already gets. Walmart plans to use this customer data to sell targeted ad space, such as banners above Walmart.com search results, and to help advertisers track ad results.
With people only able to buy so many new TVs, vendors have been pushing for ways to make money off of already-purchased TVs. That means putting ads on TV OSes and TVs that gather customer data, including what users watch and which ads they click on, when possible. TV makers like Vizio, Amazon, and LG are increasingly focusing on ads as revenue streams.
Meanwhile, retailers like Walmart are also turning to ads for revenue. Through Vizio, Walmart is looking to add a business with the vast majority of gross profit coming from ads. Data acquired through SmartCast can shed light on ad effectiveness and improve ad targeting, Vizio tells advertisers.
In an interview with WSJ, Dallaire noted that smart TVs and streaming have turned the TV business into a software, not hardware, business. According to a spokesperson for Parks Associate that Ars Technica spoke with, Vizio has 12 percent of connected TV OS market share. WSJ reported last week that Roku OS has more market share at 25 percent; although, a graph that Parks Associates’ rep sent to me suggests the percentage is smaller (Parks Associates’ spokesperson wouldn’t confirm Roku OS’ market share or the accuracy of WSJ’s report to Ars). Roku OS is on Walmart’s “onn.” TVs, but Walmart doesn’t own Roku.
Vizio TVs could get worse
From the perspective of a company seeking to grow its ad business, buying Vizio seems reasonable. But from a user perspective, Vizio TVs risk becoming too centered on selling and measuring ads.
There was already a large financial incentive for Vizio to focus on growing Platform+ and the profitability of SmartCast (in its most recent earnings report, Vizio said its average revenue per SmartCast user increased 14 percent year over year to $31.55). For years, Vizio’s business has been more about selling ads than selling TVs. An acquisition focused on ads can potentially detract from a focus on improving Vizio hardware.
Stuffing more ads into TVs could also ruin the experience for people seeking a quality TV at a lower cost. While some people may be willing to sacrifice features and image quality to save money, others aren’t willing to deal with more ads and incessant interest in viewer tracking for that experience. With Vizio expected to become part of a conglomerate eager to grow its ad business, it’s possible that the ads experience on Vizio TVs could worsen.
Editor’s note: This article was edited to include information from Parks Associates.
