Vizio Inc. has downsized its Irvine operation and is in jeopardy of losing its long-held No. 2 position in flat-panel TV sales in North America.
In the past year, the Irvine-based company has lost 62 employees through a mix of layoffs and voluntary departures, more than a quarter of the workforce at its Spectrum headquarters. The brand entered May as Orange County’s fifth-largest consumer electronics maker, with 176 workers, down 26.5% year-over-year, the biggest percentage decrease of any company on the Business Journal’s recent annual ranking on the key sector.
“Vizio conducted a workforce realignment that resulted in a reduction in staff of less than 40 positions,” a company spokesperson told the Business Journal, referring to the layoffs.
The restructuring came in the fourth quarter, the industry’s best-selling quarter of the year, highlighted by Black Friday sales and other holiday shopping. Vizio’s Irvine operation, similar to its others in the U.S. and Mexico, has always run lean, a trademark of its success in the mature North American market.
“The move was in part to help position Vizio for accelerated growth in a very competitive market,” the spokesperson said.
TV Sales Down
The company could use a jump-start following a down year.
Flat-panel TV shipments in the U.S. and Canada fell 4.3% last year to 41.6 million units year-over-year, according to the most recent figures compiled by London-based IHS Markit and disclosed to the Business Journal.
Perennial No. 1 seller, Seoul-based Samsung Electronics Co. Ltd., the world’s largest consumer electronics maker with $222.3 billion in sales last year, held the ranking with a 28% market share, down from 30% in 2016.
Vizio trailed with nearly a 14% share, down from 19%.
LG Electronics Inc., also based in Seoul, had a 12% share, up from 11%.
Chinese Rival
Chinese conglomerate TCL, a newer entrant in North America, is the fastest-growing brand, doubling market share to 10%. It benefited from new and added shelf space for its line of flat and smart TVs at big-box retailers, such as Best Buy and Walmart, according to Paul Gagnon, IHS executive director of research and analysis of technology, media and telecom.
“Just a difference of one or two placements on thousands of store shelves can have a big impact on the business,” he said.
TCL entered the U.S. market in 2013, abruptly halting operations a year later before Chris Larson was hired as senior vice president of Corona-based TCL North America to relaunch the brand with a new strategy.
“It’s not just a box at a price,” Larson said. “We want to deliver an experience to the consumer.”
The emphasis led to removing all numbers and limiting buttons on the remote, implementing a live-TV pause option through a thumb drive on the set, and making setup more seamless and intuitive.
A partnership with Roku that includes a built-in Roku operating system on some models, has benefitted both companies, according to Gagnon. TCL says the smart TVs have the most streaming channels of any brand—an attractive benefit as more viewers ditch traditional cable providers.
Vizio added the Google Play Movies & TV app to higher-end models last year, allowing users to access tens of thousands of new-release movies and next-day TV shows. The brand introduced its latest SmartCast OS with voice support in April, providing access to thousands of apps enabled by Google Chromecast, an add-on device that plugs into the TV and costs about $70.
TCL’s rapid rise on the leader board is somewhat similar to that of Vizio, which shipped its first TV in early 2003 through big-box distribution deals with such retailers as Walmart, Best Buy, Target, Costco and Sam’s Club. The company linked affordability and quality design to deep connections with Asian suppliers, such as Foxconn/Hon Hai, Wistron, and TPV.
By 2007, Vizio was the No. 1 seller of flat screens in the U.S.
Its ascension in the sound bar segment was just as impressive. Vizio released its first speaker in 2009 and within a year became the market-share leader in the U.S.
It remains among the top sellers of sound bar speakers.
Vizio, led by co-founder William Wang, is OC’s second-largest minority-owned business, with annual revenue over $3 billion. Fountain Valley-based Kingston Technology Co. is the perennial leader with estimated revenue of $6.6 billion.
Data Factor
Vizio’s growth prospects appear murky.
The company is still embroiled in a lawsuit with LeEco after its $2 billion proposed sale to the Chinese conglomerate collapsed last year. Vizio seeks $110 million in damages, legal fees and other relief, contending LeEco’s management team, led by Chief Executive and founder Yueting “YT” Jia, and finance arm Global Holding breached the sales contract, failed to negotiate in good faith, and refused to pay the remaining $50 million in buyer-termination fees, according to court documents filed in Superior Court in Santa Ana.
Vizio declined to discuss its developing data business, the target of a 2016 class-action lawsuit filed by Trent Strader alleging the company monitored and tracked his viewing habits through his smart TV, unbeknownst to him.
Vizio at the time called the suit “factually wrong, based on inaccurate speculation, and legally without any merit.”
Privacy concerns have taken global prominence, exacerbated by the recent Facebook and Cambridge Analytica scandal that rocked the tech and political worlds. The European Union this week enacted one of the most stringent data-protection laws in the world. The regulation directs how personal data is collected, stored, transmitted and destroyed, requiring consent of the individual to collect data, a detailed list of processed data, and establishment of a data-protection officer at businesses in Europe, among other stipulations that widely expand data-protection rights and commercial compliance.
Fines for failure to comply, levied case by case, can run into the tens of millions of dollars.
“We continue to monitor developments in privacy laws and regulation,” a Vizio spokesperson told the Business Journal last week.
The LeEco fallout also hampered Vizio’s efforts to expand into China as a planned joint venture never materialized.
“Vizio is always evaluating new markets and opportunities, but at this time, there are no developments to address.”
