Today, Walmart announced that it has purchased Vizio for $2.3 billion in cash. This move will help it fight Amazon and expand its growing ad business.
Vizio fits in naturally in Walmart, given that it’s the largest television brand sold by the retail giant. But this deal is less about the TVs themselves and what’s on the screen — namely, an opportunity for advertising. With smart TV operating systems increasingly a source of customer viewing data, as well as advertising spots from its WatchFree+ free, ad-supported streaming service, Walmart can unlock a new stream of revenue beyond selling goods in its stores and online.
“There is a lot to be excited about with this acquisition,” said Seth Dallaire, executive vice president and chief revenue officer, Walmart U.S. “We believe VIZIO’s customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling. 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.”
“We believe this is the ideal next chapter in VIZIO’s history. By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers,” said William Wang, chief executive officer of VIZIO. “Walmart’s approach is aligned with VIZIO’s mission and vision, and our technology will help bring a scaled, connected TV advertising platform to Walmart Connect. This transaction delivers immediate and compelling value to VIZIO stockholders and is a true testament to the hard work of the entire VIZIO team.”
A myriad of companies are racing to own the biggest screen in the house. Roku is already the leader with the largest share of smart TV operating systems, but retail rival Amazon also has a significant presence with its Fire TV devices. With this deal Walmart can now better compete with Amazon Prime as it tries to grow Walmart+.
For Walmart, advertising could also represent a higher margin business vs. its traditional goods and groceries found in its brick-and-mortar stores.
Vizio, meanwhile, got its start as a low-cost television brand, but has gradually increased the quality of its products and has been one of the more successful businesses in the segment. Now Vizio offers a wide range of models, from high-end TVs to budget-friendly versions.
Walmart already sells its own televisions under the Onn brand, but they run on Google and Roku’s TV operating systems.
This deal is subject to regulatory approval before it can be closed.
Spokesmen for Walmart couldn’t immediately be reached for comment.