In the case of television screens, the net profit margins on sales of these devices are in the single-digit percentages. Fairly thin, around 4-7%. Higher-end pr

In the case of television screens, the net profit margins on sales of these devices are in the single-digit percentages. Fairly thin, around 4-7%. Higher-end products, such as cutting-edge flagship products (e.g. 100"+ MicroLED television screens) will have higher margins, but lower production yields, and orders of magnitude lower sales volume. These products don't need to be replaced year after year, and most buyers are not selecting a product based on the technical specifications and performance, rather the screen-size per dollar (or whatever currency used) and other factors such as aesthetic appeal of the device in the home environment. The average lifetime, before replacement, of a television screen in North America is somewhere around 5-7 years, and you don't need one in every room of your home or living space. The commodification of screens from both the production side (i.e. newer entrants to the market from Chinese manufacturers) and from the content portal side (i.e. Roku, Google TV, Fire TV, etc) is a major strategic problem for the television brands you are probably most familiar with. The forementioned examples of content portals are coming from companies that are fundamentally based around advertising, and the companies that were traditionally about manufacturing realized that the advertising revenue opportunity was too good to give up. They are trying to grow their revenue, and profitability, and see that they won't be able to do so from their original core businesses. This is also why you're seeing all of these "FAST" (Free, Ad-supported Streaming Television) services popping up from the tv manufacturers themselves. Vizio, for example, was a value-oriented producer of televisions and related products. In 2021, as Vizio became a public company, they disclosed that they make more than twice the profit from their advertising/service business than their device sales (https://www.theverge.com/2021/11/10/22773073/vizio-acr-advertising-inscape-data-privacy-q3-2021 https://www.theverge.com/2021/11/10/22773073/vizio-acr-adver...). Walmart is now acquiring Vizio for that business and the opportunity to collect customer data (https://corporate.walmart.com/news/2024/02/20/walmart-agrees-to-acquire-vizio-holding-corp-to-facilitate-accelerated-growth-of-walmart-connect-through-vizio-s-smartcast-operating-system https://corporate.walmart.com/news/2024/02/20/walmart-agrees...). Roku is another good focused example because they are a publicly traded company and you can analyze their income statements and business model. Their hardware devices are basically being sold at cost or at a loss so they can seed the market and create an audience (i.e. their inventory) for their high-margin advertising services business. Google and Amazon also want a large piece of this pie. Apple is starting to show that they want advertising money too. We are also seeing cases where the television devices themselves can be produced cheap enough to be given away to users that opt into advertising (e.g. Telly: https://www.theverge.com/2023/5/15/23721674/telly-free-tv-streaming-ilya-pozin-ads https://www.theverge.com/2023/5/15/23721674/telly-free-tv-st...). When this dynamic is economically viable (i.e. give away the hardware, make the money via ads), you can see how big of a problem traditional television device manufacturers have.