LG Electronics is bolstering its platform-based services by leveraging its proprietary television (TV) operating system (OS), webOS. Industry observers are closely watching to see how effectively the software offerings—including TV content and smart targeted advertising—can counterbalance the company’s sluggish TV sales.
The tech giant has unveiled ambitious plans to expand its platform-based service revenue more than fivefold by 2030, aiming for platform operations to contribute over 20% of its total operating profit.
Transition to Platform-Based Services, webOS at the Core
At the heart of LG Electronics’ platform-based service strategy lies the webOS business. This division reached a significant milestone last year, surpassing 1 trillion KRW (about 718 million USD) in revenue. Approximately 74% of this revenue came from advertising and content sales, with the remainder generated from content distribution fees, subscription services, and licensing revenue for platform integration.
As LG Electronics’ TV business faces headwinds, the company’s webOS initiative is garnering increased attention. Serving as LG Electronics’ proprietary smart TV platform, webOS generates revenue through content, advertising, and apps. The company has also begun licensing webOS to manufacturers with TV production capabilities but lacking smart TV software, similar to the smartphone industry’s adoption of Google’s Android operating system.
The reach of webOS has expanded significantly, with over 200 million devices now featuring the platform, including TVs sold by LG Electronics. The company’s strategy involves leveraging webOS to analyze consumer behavior and deliver targeted advertising, thereby creating a new revenue stream.
Using automatic content recognition (ACR) technology, webOS collects and analyzes vast amounts of real-time data on viewers’ content consumption patterns, app usage, and preferences. This data includes information on the content watched, channels viewed, viewing durations, and user profiles.
This technology is particularly valuable in the growing landscape of free ad-supported streaming television (FAST) channels, as it enables the delivery of personalized advertising and opens up new revenue opportunities.
For example, if a viewer predominantly watches sports content, advertisers can strategically place ads for sports apparel and equipment during FAST channel viewing. Similarly, viewers of action movies might see targeted ads for sports cars featured in those films, maximizing the effectiveness of the ads.
LG Ad Solutions Gains Ground in Global CTV Market
LG Electronics has already begun expanding its webOS-based business through its global connected TV (CTV) advertising brand, LG Ad Solutions.
Founded in 2012, Alphonso became a key partner of LG Group when LG Electronics acquired a 60% stake in 2020. Rebranded as LG Ad Solutions, the company has successfully expanded its operations across North America, Europe, and Latin America (LATAM), making significant strides in monetizing TV-based advertising.
The company has differentiated itself by offering diverse ad formats and scalability. Its offerings include native ads integrated into the home screen, over 350 free ad-supported streaming (FAST) channels, more than 7,000 video on demand (VOD) content-based CTV ads, and cross-device advertising that spans mobile, tablet, and desktop platforms.
The effectiveness of these advertising solutions is well-documented. Wells Fargo reported a 17.2% increase in reaching new customers through credit card ads that traditional TV advertising had not captured. Additionally, a global pharmaceutical brand precisely targeted Spanish-speaking viewers, reaching 15% more customers than before. Meanwhile, global information services company Experian saw consumer recall rates for its credit management app ads soar to 13 times the industry average.
Ashish Chordia, founder of Alphonso, highlighted the synergy with LG Electronics by stating that last year, webOS-based revenue at LG Electronics exceeded 1 trillion KRW (about 718 million USD), contributing to roughly a 40% increase in Alphonso’s performance over the past two years.
He emphasized that it will play a pivotal role in realizing LG Electronics’ vision of evolving smart TVs. Further highlighting that they are committed to pursuing technology investments and global market expansion in collaboration with LG Electronics.