Advertisements are constantly flooding our living rooms. And it doesn’t matter whether you’re watching a TV channel, browsing the interface of your Smart TV, playing YouTube or looking at the buttons on your remote control… Ads will almost always be present and the way this business is currently operating, it looks like they’re going to continue to accompany us very closely.

Smart TV manufacturers and service providers know that the advertising-based business model works, and according to LG Electronics CEO William Cho, that’s what it looks like. Your business strategy will focus even more on this aspect..

An advertising-based business model

In an official statement, Cho announced the direction LG Electronics will take going forward. This will focus on the transformation of its hardware business Towards a platform-as-a-service business model This provides ongoing benefits beyond the moment of purchasing your products.

This means: LG may be more dependent on ad revenue services that offer the user a range of options that enable the company to generate revenue through advertising-based platforms.

“To start, starting later this year, LG’s TV business is expected to undergo a major transformation based on the webOS operating system, which powers more than 200 million smart TVs worldwide. In parallel, the company plans to transform its TV business portfolio. LG says it is becoming a “media and entertainment service provider” by expanding content, services, and advertising across products with a distinct competitive edge, including LG OLED and LG QNED TVs.

This strategy also stems from a plan to invest approximately $39.5 billion in R&D with a goal of reaching $79 billion in sales revenue by 2030, a significant growth compared to revenue in 2023 (approximately $63,700 million).

To achieve this goal, one of its plans is to expand the webOS platform to more television manufacturers; this strategy started in 2021 and it is already possible to see televisions with webOS not produced by LG in other countries.

The company will also invest in LG Channels, a free channel service integrated into its televisions, which we mentioned earlier. According to the company, this platform The number of users increased from 20 million to 48 million in 2023It is available in approximately 29 countries.

“The company will invest more than KRW 1 trillion over five years to strengthen its content competitiveness and support the growth of LG Channels, its free advertising-based broadcasting platform. LG Channels grew from 20 million users to 48 million in 25 countries last year. To achieve quantitative growth in 29 countries this year, LG will expand customer touchpoints by increasing the availability of the webOS platform to external TV brands and expanding the webOS application to other product lines.”

Focusing its business model on advertising-based platforms and services that generate recurring revenue could also reduce LG’s hardware costs. can offer televisions at more competitive prices and make up for this loss with your ad revenue.

This is all still speculation, but seeing how projects like Telly’s and the offer of free television with ads have come to light gives us an idea of ​​how lucrative this business is for companies.

A previous version of this article was published in 2023.

Image | Xataka

Xataka at Smart Home | If I had to buy a Smart TV for less than 500 euros I would buy this