Walmart’s Acquisition Of Vizio Is More About Consumer Insights

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Earlier this week, Walmart
WMT
, the largest U.S. company by revenue with $648 billion in sales last year, announced the acquisition of Vizio Holding Corp., one of the largest manufacturers of web enhanced “smart” television sets. The cash deal has been valued at about $2.3 billion. The acquisition will be contingent on regulatory approval. In addition, the deal could fall through if Vizio is offered a better deal over the next 45 days.

As part of the purchase, Walmart will also acquire Vizio’s SmartCast operating system with 18 million live accounts. The SmartCast OS is embedded in all Vizio TV sets and can be connected to Apple Airplay and Amazon’sAmazon” data-type=”stock”>
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Alexa. The number of SmartCast OS accounts has increased by about 400% since 2018. The SmartCast OS will provide Walmart insightful first-party information including the purchasing and viewing habits of consumers, allowing for more targeted ad messaging. Hence, Walmart’s acquisition is more about the vast amount of data and shopping insights Vizio can provide than selling television sets.

As a result of the deal, Walmart will become an active participant in connected TV advertising, competing head-to-head with platform operators Roku, Amazon and YouTube among others. Vizio’s 18 million accounts however, lag far behind Roku at 80 million and last year Amazon surpassed 200 million Fire TV units sold. Last month, Amazon launched an ad supported tier to Prime Video.

As cord-cutting continues, this year, Insider Intelligence forecasts U.S. ad dollars for connected TV to total $30.1 billion, an increase of 22.4% from the previous year. In 2023 Walmart Connect, its ad revenue division, reached $3.4 billion, a year-over-year increase of 28%. Overall, the ad dollars of Walmart Connect accounted for about 2% of total company revenue. By comparison, in 2023 Amazon generated nearly $50 billion in global ad revenue, a year-over-year increase of 24%.

David Zapletal, Chief Operation Officer at Digital Remedy notes, “Walmart has entered Amazon and Best Buy’s
BBY
ecosystem of users through the purchase of Vizio—a strategic move that will not only increase Walmart’s inventory supply but also boost e-commerce sales for the company. This newly-announced acquisition positions Walmart to succeed on various fronts by embedding itself in consumers’ homes and gaining additional scale to reach net new customers. Walmart’s expansion of its existing ad business to connected TVs will allow the company to easily gain deeper insights into media consumption habits and exert an overall influence on its growing commerce sales.”

Walmart’s primary sources of ad revenue has been in their brick-and-mortar stores and website. Each year, 90% of U.S. shoppers visit Walmart. In addition, their website averages 160 million weekly visits. The acquisition will enable Walmart increase revenue by offering more relevant ads to consumers and creating new entertainment options.

At the time of the announcement, Vizio, has an existing advertising platform of more than 500 brand relationships, including many “Fortune 500” companies. Vizio, which started its advertising division in 2019, reported ad revenue over the first nine months of 2023 of approximately $260 million. This is a primary reason for Walmart’s acquisition.

Earlier this month, Vizio’s FAST channel WatchFree+ announced its viewing hours had doubled over the past year (although the number of hours was not available). WatchFree+, launched in 2021, now has 300 linear channels, 15,000 on-demand titles and 10 Vizio curated channels programmed in-house.

In an email, Mark Zamuner, President of Juice Media wrote, “This gives Walmart a platform to compete in consumers homes. It’s a way to directly project advertising and assess performance that Amazon has long had access to via Prime. The world has been so focused on the large digital players like Meta, ensuring greater privacy, protections and less visibility into consumer purchase behavior, but the reality is Amazon has long had an advantage because of the sheer amount of purchasing data they own which can easily be tied back into their ad platforms targeting and analytics. Walmart is now on the same trajectory. Over 1/3 of Americans shop at Walmart in a given year, and with their expanded product and category offerings outside of grocery they will be able to provide advertisers from all categories real data on audiences with high intent and purchase behavior, making them a highly viable alternative ad platform to Amazon.”

The acquisition of Vizio will also make Walmart more competitive in retail media, another fast-growing ad supported platform. Last year, Insider Intelligence reported U.S. ad revenue for retail media totaled $45.15 billion. With more companies launching a retail media unit and continued advertising interest, it is projected to grow by 28.6% this year. At present, retail media is dominated by Amazon which accounted for three-quarters of total market share last year.

In a statement, Seth Dallaire, EVP and CRO
CRO
at Walmart U.S. said, “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.”

This will not be Walmart’s first foray with streaming video. In 2010 the retail giant acquired Vudu. In 2020, one year after streaming their first original content, Walmart sold Vudu to Comcast’s
CMCSA
Fandango. The terms of the agreement were not announced.

According to , the Walton family, descendants of founder Sam Walton and his brother Bud Walton, is the richest family in the U.S. with a collective net worth of $267 billion. The family owns about 45% of Walmart.