The Korean tech giant is transforming from a hardware-oriented business to a platform-based service model that continuously generates profits. That means ads and upselling owners on services and features.
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LG Electronics is looking to squeeze some additional cash from its customers by going all in on advertising and subscription offerings for its home appliances and televisions. It’s part of a plan to increase global annual revenue from the $51 billion reported last year to almost $79 billion by 2030. Part of that growth strategy is to get webOS — the operating system running LG smart TVs — onto more external TV brands and “other product groups.”
On Wednesday, LG CEO William Cho announced the Korean tech giant’s intention to transform itself into a “smart life solution company” by diversifying its current business portfolio and creating a business model that focuses on “customer engagement.” LG’s new growth strategy will introduce a “platform-based service business model that continuously generates profits, such as content and services, subscriptions and solutions” across its product portfolio.
“LG will continue to pursue its bold vision to transform and leap forward as a smart life solution company that connects and expands customers’ various spaces and experiences, rather than resting on its current position as the best home appliance brand that provides quality products,” said CEO Cho. “We will establish a brand-new LG by reinventing the way we work and communicate toward this goal.”
LG says that its TV business will be the first to transition to the new business model, with the intent of transforming into a “media and entertainment service provider.” Sometime towards the end of this year, the company is looking to introduce changes to its webOS TV software that will allow LG to expand “content, services and advertisement” across products like LG’s OLED and QNED TVs. According to LG, the webOS platform is already running on over 200 million smart TVs globally. The company also intends to bring its webOS software to external television brands and non-TV hardware in the LG product family at some point in the next five years.
Subscriptions will also play a prevalent role on LG’s range of household appliances. According to the company’s press release “the goal is to further evolve LG ThinQ UP appliances that upgrade functions customers need even after purchase and evolve into a “Home as a Service platform,” which includes customer personalization options, subscription services, and support for unnamed smart home services. LG introduced its ThinQ UP range of upgradable appliances last year that are designed to be updated with new features via the ThinQ app. We noted at the time that some automakers were using a similar business model to charge customers to unlock features that are already built into their vehicles — it seems LG was paying attention.
It’s hard to imagine these changes will be met with open arms by consumers. As noted by The Register, the sheer number of services adopting subscription models in recent years has sparked concerns over “subscription fatigue” — a term used to describe consumers who are overwhelmed by subscription offerings. It’s prevalent enough that the US Federal Trade Commission has proposed introducing firmer regulations to stamp out some of the industry’s more nefarious practices, like nonconsensual billing and making subscriptions intentionally difficult to cancel.
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July 14, 2023 at 07:03PM
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LG plans to expand ads and subscriptions across its TV and appliances - The Verge
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