• The vast majority of televisions available today are "smart" TVs, with internet connections, ad placement, and streaming services built in.
  • Despite the added functionality, TV prices are lower than ever especially from companies like TCL and Vizio, which specialize in low-cost, high-tech smart TVs.
  • There's a simple reason that smart TV prices are so low: some TV makers collect user data and sell it to third-parties, which can offset the cost.

Massive TVs with razor-thin frames, brilliant image quality, and streaming services built-in are more affordable than ever thanks to companies like Vizio and TCL.

If you want a 65-inch 4K smart TV with HDR capability, one can be purchased for below $500 a surprisingly low price for such a massive piece of technology, nonetheless one that's likely to live in your home for years before you upgrade.

But that low price comes with a caveat most people don't realize: Some manufacturers collect data about users, then sell that data to third-parties. That data can include what type of shows you watch, which ads you watch, your approximate location, and more.

TCL P-series, Roku TV ad
TCL P-series, Roku TV ad

A recent interview on The Verge's podcast with Vizio CTO Bill Baxter did a great job illuminating exactly how this works.

"This is a cutthroat industry. Its a 6% margin industry," Baxter said. "The greater strategy is I really dont need to make money off of the TV. I need to cover my cost."

More specifically, companies like Vizio don't need to make money from every TV they sell.

Smart TVs can be sold at or near cost to consumers which is great for consumers because Vizio is able to monetize those TVs through data collection, advertising, and selling direct-to-consumer entertainment (movies, etc.) which is less great for consumers.

Or, as Baxter put it: "Its not just about data collection. Its about post-purchase monetization of the TV."

And there are a few different ways to monetize those TVs post-purchase.

TCL P-series, Roku TV ads
TCL P-series, Roku TV ads

"You sell some movies, you sell some TV shows, you sell some ads, you know. Its not really that different than The Verge website," he said.

It's those additional forms of revenue that helps make the large, beautiful smart TVs from companies like Vizio and TCL so affordable.

Without that revenue stream, Baxter said, consumers would be paying more upfront cost. "Wed collect a little bit more margin at retail to offset it."

The exchange is fascinating and worth listening to in full check it out right here .

NOW WATCH: I cut Google out of my life for 2 weeks, but the alternatives prove why Google is so much better

See Also:

SEE ALSO: Samsung's absurd 219-inch TV takes up an entire wall thus its name, 'The Wall'