With the fact that a number of smart TVs require a connection to a Wi-Fi AP for them to "update firmware"... shouldn't the prices on those be cheaper, because ads are subsidizing them, and all the telemetry data from the smart TV stuff is being slurped up?
They already are fairly cheap. TV manufacturers don't make much on them anymore. The margins keep shrinking.
Let's use Vizio as an example:
During the 3 month period ending June 30, 2020, they did $366.9 million in revenue for their devices segment (mainly TVs, but also soundbars). Gross profit was $40.2 million, giving their devices a margin of 10.96%.
During the same period for 2021, they did $355.6 million in revenue for their devices. Gross profit was $32.1 million resulting in a margin of 9.56%.
Now let's compare Devices to their Platform Plus segment (where they make money from ads, service subscription sign-ups, etc.):
For the 3 month period ending June 30, 2020, Platform Plus revenue was $26.6 million and gross profit was $17.8 million. Margin? 66.92%
For the 3 month period ending June 30, 2021, Platform Plus revenue was $65.5 million and gross profit was $47.5 million. Margin? 72.52%
So while Vizio device sales generate the majority of revenue, it's the Platform Plus segment that's more profitable.
Vizio even stated so in their IPO filing: "We believe that Platform Plus will be the key driver of our future margin growth and financial performance."
That means their devices will become less and less profitable over time. They even stated so in their most recent Financial Results and Outlook for Q2 2021: Devices: Gross margins to trend toward single digits over the coming quarters, more in line with long-term trend.