Vizio TVs are cheap. You can buy a 50” 4K HDR Smart TV for below $500. How is this possible? In this article, I’ll share with you some of the reasons why Vizio TVs are so cheap.
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Vizio TVs are made in third-world countries
Vizio TVs are cheap because their production is outsourced to countries with lower labor costs.
Vizio manufactures its TVs in Mexico, China, and Vietnam. More specifically, Vizio makes its products under agreements with original design manufacturers (ODM) in those countries.
An ODM (original design manufacturer) is a company that takes the original specifications of another company and builds the product based on the design specifications.
ODMs allow companies like Vizio to sell products without designing all the hardware or investing in expensive factories.
The ODM provides the manufacturing, but companies like Vizio often keep the design rights.
Vizio relies heavily on these manufacturers to make components for their TVs, including LCD and OLED panels, polarizers, circuit boards, chipsets, etc.
Since Vizio outsources its production, it does not need to focus on manufacturing. All Vizio needs to do is market and distribute its products. Thus, companies like Vizio use supply chain benefits from other countries to cut costs and boost profits.
Vizio is in an expansion phase
Brands like Vizio, TCL, and Hisense are newer to the market. Unlike established brands, they need to grow their customer base early on.
To attract customers, they accept smaller profits rather than maximizing them. Without this approach, their odds of gaining brand recognition drop.
In an interview on Verge’s podcast, Vizio’s chief technology officer, Bill Baxter, claims that “this is a cutthroat business” and “it’s a 6% margin industry.”
The main strategy is not earning money from TV sales. Today’s Smart TV brands price TVs to cover costs. They profit after the TV is sold.
This brings me to my next point…
Vizio’s profit comes after you purchase the TV
Brands like Vizio can’t price their TVs too high. To compete, Vizio prices their TVs just to cover costs. They don’t need to profit from every TV sale. How? Post-purchase monetization.
Vizio TVs are priced low. Their profit comes from data collection, ads, and content sales. When you watch TV, Vizio collects and sells your data. They also earn from ads shown on their TVs.
Vizio Smart TVs offer direct streaming of shows and movies.
This is thanks to the SmartCast system with Chromecast and Apple AirPlay. With a Vizio TV purchase, you get access to apps like Apple TV+, Disney+, and others on their platform.
The more you watch, the more Vizio earns from these apps. Most TVs today, including Vizio’s, are “smart” with internet, ads, and built-in streaming. That’s why they’re priced low.
Vizio positions itself as a budget brand
Another reason Vizio TVs are affordable is their market strategy.
Vizio doesn’t compete with premium brands like Sony and LG. They target the mid-range market, setting themselves apart with price, not features.
Vizio offers quality and features similar to premium brands but at a lower price. For example, their M-Series has all you need for gaming.
According to CNBC’s 2021 data, around 50% of the U.S. population belongs to the middle class.
I think Vizio’s market strategy is smart. By focusing on the mid-range market, they offer affordable, high-quality TVs to consumers who don’t want to spend too much.
Vizio TVs don’t have all the bells and whistles
Vizio sells TVs at lower prices by cutting extra features and using lower-quality accessories. This means you might get a cheaper remote and a weaker processor.
I’ve tried a few Vizio TVs in my life. I’ve particularly noticed a difference in the quality of the remote control compared to pricier brands like Samsung and Sony.
The user interface (UI) on Vizio TVs isn’t always smooth; I’ve noticed occasional slowdowns on the SmartCast interface. However, most of these issues can be resolved with a firmware update.
I believe Vizio aims to make TVs accessible to everyone. They might lack some premium features, but they offer good value for the price.
Competition in the television industry
In an effort to steal customers from their competitors or gain market share, companies reduce the prices of their products and services. This is what’s known as a price war.
Vizio TVs are known to be affordable, but the brand faces stiff competition. Many budget TV brands, like Hisense, RCA, and Insignia, vie for market share.
All these brands compete with Vizio. In industries with heavy competition, price wars are common. Competitors have an incentive to lower prices for more market share.
If a brand like Insignia lowers its TV prices, Vizio may also drop prices, as they compete in the same market.
This is obviously good news for consumers, as they can purchase affordable smart TVs. In fact, some Vizio TVs are priced just under $200, which is impressive.
