Although smart homes are tasked with an increasing number of everyday activities to keep users safe, healthy, and entertained, privacy concerns arise due to the large amount of personal data in flux. Privacy is widely acknowledged to be contextually dependent, however, the interrelated stakeholders involved in developing and delivering smart home services–IoT developers, companies, users, and lawmakers, to name a few–might approach the smart home context differently. This paper considers smart homes as digital ecosystems to support a contextual analysis of smart home privacy. A conceptual model and an ecosystem ontology are proposed through design science research methodology to systematize the analyses. Four privacy-oriented scenarios of surveillance in smart homes are discussed to demonstrate the utility of the digital ecosystem approach. The concerns pertain to power dynamics among users such as main users, smart home bystanders, parent-child dynamics, and intimate partner relationships and the responsibility of both companies and public organizations to ensure privacy and the ethical use of IoT devices over time. Continuous evaluation of the approach is encouraged to support the complex challenge of ensuring user privacy in smart homes.