Vizio Inc. has acquired full ownership of a technology that enables smart TVs to capture, record and disseminate data on the viewing habits of its customers.
The deal comes as the Irvine-based consumer electronics company prepares for an initial public offering.
The flat-TV seller and designer paid $50 million in cash to obtain a 90% ownership stake in San Francisco-based Cognitive Media Networks Inc. it didn’t already own, according to documents filed Aug. 31 with the Securities and Exchange Commission.
Cognitive Media’s software identifies content displayed on a smart TV, notifies the content provider of viewership, and enables the TV to launch interactive apps, ads, and other content directly to the consumer.
The data captured includes ZIP codes, allowing marketers to zero in on consumer behavior in defined geographic areas and to target viewers with specific branding messages, promotions or other product offerings.
Consumers can disable the software through their TV settings menu, according to Cognitive Media’s website.
Vizio did not respond to calls for comment on the deal, which provides would-be investors and analysts a glimpse into potential new revenue streams as a public company.
Cognitive Media’s automated software is an integral component of Vizio’s Inscape data services, which aim to monetize data collected from millions of consumers who own Vizio TVs.
The product captures up to 100 billion daily viewing data points—although viewers are not personally identified—from the company’s base of more than 8 million connected TVs that “can be used to generate intelligent insights for advertisers and media content providers,” the company highlighted in a prior regulatory filing to potential investors.
“Advertisers and media content providers are looking for access to accurate, real-time data regarding consumer preferences and behaviors so they can better measure and increase their return on content creation and advertising spend,” Vizio said in the most recent filing. “We believe total global market spend on audience and advertisement measurement services was approximately $1.9 billion in 2014, and this represents an attractive market opportunity.”
Smart TVs started carrying automatic content recognition software in 2012. Dallas-based market researcher Parks Associates predicts that by 2018, the feature will be embedded in about 62% of U.S. homes with a smart TV, roughly 48.5 million households.
Vizio, which battles Samsung as the top smart TV seller in the U.S., generated 95% of its $3.1 billion in revenue last year from TV sales.
The company has linked quality design and deep connections with Asian suppliers, such as Foxconn/Hon Hai, Wistron, and TPV, with distribution agreements with the largest U.S. retailers, such as Wal-Mart, Best Buy, Target, Costco and Sam’s Club.
Indeed, Wal-Mart and Sam’s Club accounted for 52% of Vizio’s net sales last year, with Costco and Best Buy combining for about 20%.
Vizio’s products are carried in more than 8,000 U.S. retail outlets. The company is the No. 1 seller of soundbars in the U.S.
Vizio is seeking to raise up to $172.5 million in the IPO. Share price and dates associated with the move have not been disclosed.
Co-founder and Chief Executive William Wang, who has a 54.7% ownership stake in Vizio, will retain control of the brand under the plan to take the TV titan public.
He’s expected to retain control through 10.8 million shares of Class B common stock that would be vested with approximately 95% of the voting power in the company.
The plan also calls for him to nominate a majority of the company’s board under the new proposed corporate structure, according to regulatory filings.
