TV manufacturers have avoided passing on rising component costs to consumers by shifting their business model toward advertising revenue, according to a new report from market research firm Omnia (via Digitimes). The finding explains why TV prices have remained stable even as the cost of nearly every other electronic device has climbed.
TV shipments rise amid component cost pressures
Global TV shipments increased 6% year-on-year, according to market research firm Omdia, partly driven by demand for the FIFA World Cup. Regional growth varied: Asia and Oceania saw a 13% increase, Latin America 12%, and North America 11%. Mainland China was the only major market to show decline, as Chinese manufacturers aggressively target overseas markets to compensate for slowing domestic demand, Omdia found.
These higher sales volumes come at a time when component costs are rising. TV makers face increased prices for memory chips, display panels, and other critical parts. But rather than raise retail prices, they have absorbed the extra costs, supported by a new revenue stream: advertising embedded in smart TV platforms.
Advertising revenue shields prices from increases
Omnia’s report explains that TV manufacturers have been under intense pressure not to raise prices, particularly in North America where retailer competition is fierce. Profit margins on hardware have been thin for years, forcing companies to find alternative income. By integrating advertising into smart TV interfaces, manufacturers can generate recurring revenue long after the initial sale. As the report notes, "When you sell a TV you only get paid once. But you can sell ads on that TV forever."
This "content-to-commerce" model, a term used by Walmart for its Vizio platform and Onn TVs, links streaming activity with targeted advertising. Companies such as Vizio and Walmart have already adopted this strategy, which allows them to keep hardware prices low while building a sustainable ad-based income stream.
North American retail competition keeps margins thin
The North American market exemplifies the trend, according to Omnia. Retailers compete aggressively on price, leaving manufacturers with minimal room to pass on cost increases. As a result, TV makers have embraced advertising as a way to offset thin hardware margins. The report says that while component prices continue to climb, the shift to advertising has so far prevented widespread price hikes for consumers.
However, the report warns that if component costs keep rising, manufacturers may respond by serving more ads rather than by raising prices. This could lead to an even more ad-saturated user experience.
Implications for international trade and supply chains
For trade professionals, the TV market’s pricing dynamics hold several lessons. The 6% shipment growth reflects strong demand in key regions outside China, suggesting that Chinese TV makers are increasing export volumes to compensate for domestic weakness. This shift in trade flows may affect tariff classifications, logistics routes, and inventory planning for importers and customs brokers.
Component cost increases also highlight the ongoing global semiconductor and memory supply constraints. TV manufacturers are part of a broader supply chain competing for limited chips and memory. Their ability to avoid price increases through advertising does not insulate component suppliers from pressure, nor does it remove the risk of future shortages or lead-time extensions.
What to watch
Trade executives should monitor whether the ad-supported pricing model spreads to other consumer electronics segments, and whether rising component costs eventually force manufacturers to choose between higher prices or more aggressive advertising. The next key milestone will be the holiday season shipment data and any changes in Chinese export policies targeting overseas markets.
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