It seems to be the way. Sell your hardware with all the nice features, then start removing them from the user and demand money from them for the original functionality.
Eg, I used to recomment YI cameras to people. Access from anywhere, free alerts, etc. Now, unless you pay, you have to sit through an advert before you can look at your camera footage. You have an alert someone could be breaking in, but sit through this game advert with playable level before you can check it.