Why is Walmart buying smart TV maker Vizio for $2.3 billion?
Behemoth retailer Walmart has announced that it will acquire smart TV maker Vizio for $2.3 billion to future-proof its business and compete with Amazon.
Walmart announced solid fourth quarter earnings on Tuesday exceeding expectations as well as making a bet on its burgeoning advertising business. The retail behemoth said that it has entered into an agreement to buy smart TV maker Vizio for roughly $2.3 billion.
The acquisition will give Walmart access to Vizio’s SmartCast operating system integrated into their smart TVs. In a statement the company said that this will enable Walmart to “connect with and serve its customers in new ways” as well as helping “advertisers connect with customers.”
Why is Walmart buying smart TV maker Vizio for $2.3 billion?
Walmart’s advertising business, Walmart Connect, has been growing fast, 30 percent in the past fiscal year. The closed-loop omnichannel media business currently provides suppliers and sellers with opportunities to reach its massive customer base, around 90 percent of American households, with ads in its stores and on its website.
The deal to acquire Vizio will give Walmart, in addition to access to Vizio’s SmartCast operating system, which streams ad-supported content on its devices, viewership data from thousands of smart TVs. Vizio has amassed more than 18 million active accounts through its expanding device ecosystem and SmartCast operating system, growing roughly 400 percent since 2018.
This breadth of reach will help future-proof Walmart’s media and ad business as more retailers are entering the ad business looking to profit from Apple and Google limiting the amount of data they share with third parties according to analysts. Walmart is also looking to get more of its earnings in the future to come from additional profit streams like ads and third-party sellers on its online marketplace. The acquisition of Vizio aligns with these efforts.
Revenue from SmartCast in 2023 was around $600 million according to Stephens analysts. That would add sizeable growth to Walmart Connect’s $3 billion in annual advertising revenue.
“The Vizio deal essentially takes Walmart Connect from being an advertising provider through stores and websites, to one that can penetrate consumers’ homes via television,” Neil Saunders, Managing Director at GlobalData, told Reuters. “This multichannel approach gives Walmart a lot more power and reach in the world of advertising and puts it on a more level playing field with the likes of Amazon.”
“There is a lot to be excited about with this acquisition,” said Seth Dallaire, executive vice president and chief revenue officer, Walmart US. “We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”