Walmart is acquiring VIZIO to the tune of $2.3 billion. The acquisition will bolster Walmart’s advertising business, which previously lacked a substantial foothold in the streaming market. Naturally, this deal is subject to regulatory approval and may be canceled if VIZIO receives a better offer.
Despite its weak global presence, VIZIO is currently the third-largest TV brand in the United States. This achievement is largely due to VIZIO’s pricing and advertising strategies. The company sells super-affordable TVs at a loss and makes the money back through advertising. In its Q3 2023 financial report, VIZIO posted a loss of $3.3 million in hardware sales but came out with $97 million in gross profit after accounting for its Platform+ ads division.
“Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week. We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”
Walmart explicitly points to VIZIO’s advertising capabilities as the reason for this acquisition. Once this deal is complete, the Walmart Connect ads platform will have direct access to the 18 million people who actively use VIZIO’s SmartCast operating system. It will also gain 500 advertiser relationships that are currently maintained by VIZIO.
Of course, Walmart already sells a line of Onn-branded TVs and streaming sticks. But this streaming hardware uses Roku and Google TV software, which limits Walmart’s ability to collect data and serve ads. A bespoke operating system like SmartCast gets rid of the middleman and opens the door to new advertising opportunities. That said, Roku hasn’t announced how this acquisition will affect the Onn brand or its partnership with Roku.
Even if we ignore the ads business, VIZIO SmartCast may become Walmart’s answer to Amazon Fire TV. It may also contribute to Walmart+, an Amazon Prime alternative that has struggled to match perks like Prime Video and Prime Music.
This acquisition is subject to regulatory approval, and it may be canceled if VIZIO receives a “Superior Offer” by April 5th. Even if the acquisition goes through without a hitch, we may not see any change in VIZIO’s service until late 2023 or early 2024.
Source: Walmart
