LG Electronics’ new strategy was unveiled by its CEO, William Cho, during a speech in Seoul, South Korea. The company, which currently generates sales and profits at the time of the purchase of equipment, will change to become “a platform-based service business model that generates continuous profits”. In other words, you should expect to see more advertisements and more ad-supported services on your LG OLED TV or “QNED” LCD TV in the years to come.
William Cho said:
For starters, by the end of 2023, LG’s TV business is set to experience a major transformation based on its webOS operating system, which powers more than 200 million smart TVs worldwide. With this in mind, the company intends to transform its TV business portfolio into a provider of media and entertainment services by developing content, services and advertising in products, including LG OLED and LG QNED TVs, which have differentiated competitiveness.
LG will accelerate the development of LG Channels, an ad-supported free content streaming service, competing with Pluto TV, Samsung TV Plus and other free streaming services. The Korean company plans to invest more than 1000 billion won (just over 700 million euros) over five years to strengthen the competitiveness of content and stimulate the growth of LG Channels. LG Channels has grown from 20 million users in 25 countries last year to 48 million in 29 countries this year. To succeed in attracting more users, the company will thus offer the webOS operating system to other television manufacturers, which it has already been doing since last year. At IFA 2022, we saw a Tesla television equipped with the webOS system. We therefore assume that it will facilitate access to webOS to equip as many televisions as possible. The idea being to compete with Google with its Android TV, which derives a large part of the revenue from advertisements and recommendations displayed on the home page. LG does not stop there, since the company also wants webOS to be used in other product families, without specifying which ones. We can think of connected refrigerators that could display content or even monitors.
With this new direction, LG is following in the footsteps of Amazon, Roku and other entry-level TV makers whose hardware cost is supported by revenue generated from advertisements and “recommendations”. Samsung has also changed its TV operating system — Tizen — to display more ads, which is bound to cause some slowdowns along the way, while Google is already well-known for its tendency to maximize revenue from its TV operating system. This last point also poses some concerns for Sony, TCL, Hisense and Philips. The latter two have decided to put the emphasis back on their own home system, Vidaa U for the first and Saphi for the second (see the article Philips The Xtra: the affordable Philips Mini-led TV, between The One and the Oled). It would seem that only Panasonic with its in-house MyHomeScreen OS system, derived from Firefox OS from the Mozilla Foundation, is still resisting the arrival of advertisements.