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Walmart to acquire smart TV maker Vizio for $2.3 billion
ABC News
February 20th, 2024
Summary: After much speculation last week, Walmart has made its move on Vizio. The acquisition would give Walmart Vizio’s SmartCast operating system—which has grown 400% since 2018 to 18M active accounts—and all the data those accounts generate. More than 500 direct advertisers run campaigns on SmartCast. Vizio's Platform+ business unit, which includes advertising, had $156.2M in Q3 revenue, with ad sales growing 27% at a 60% margin.
Between Vizio and its own private-label Onn brand, Walmart would control about 22% of the US TV market. Walmart would also be able to give its suppliers more opportunities to leverage its first-party data for targeting streaming ads served on its smart TVs. Amazon has a similar play where it directs retail media demand to its own Prime Video inventory. The deal will also position Walmart as a major competitor to Roku, Samsung, and YouTube.
Deal Grades:
Walmart: B+
Vizio: A
Opinion: There’s the basic stuff and the ‘dig a little deeper’ stuff to this story.
Let’s get the basic stuff out of the way first:
- Vizio was struggling as a business, the Walmart acquisition is a parachute for them. Walmart might have been better off paying several more billion to buy Roku instead (they would have gotten a full blown ad platform). Oh well, easy for us to say, it's not our billions going out the door.
- Walmart’s ad business is almost as profitable as its brick & mortar grocery business. Process that for a second! Adding Vizio's growing TV ad business into the mix is a huge win for Walmart. This deal is all about advertising, not about making money off of Vizio TV sales.
- Vizio TVs are about to get harder to buy on Amazon and Samsung, LG, and Fire TVs are about to get harder to buy at Walmart!
And now for the more interesting, “dig a little deeper” stuff:
- Vizio ACR data + Walmart retail data = 🔥. CTV and commerce are two of the fastest growing sectors in advertising. No other company (including Amazon) will be able to cross such valuable, scaled data sets from television to in-store purchase in order to drive superior, more measureable outcomes for advertisers.
- This deal is bad news for other CTV hardware and software companies that rely heavily on ad revenue, such as Roku, Samsung, LG, etc. It’s also bad news for Amazon and Google, who have major CTV + retail ambitions.
- Vizio has been licensing its ACR data to many parties across the industry for planning and measurement purposes. Vizio also has an exclusive agreement with Yahoo to utilize its ACR data specifically for ad targeting purposes. But Walmart will eventually lock up Vizio ACR data within its walls, which will be a huge pain in the butt for CTV advertisers. See:
This takes us to our final point. Walmart has proven it can be a successful ad company ($3.4B in 2023 ad revenue). Buying Vizio signals that they believe they can become the next big, walled garden. In order to compete with the Googles, Metas, and Amazons of the world, they shouldn’t be renting (The Trade Desk’s) tech anymore. We think they will buy tech soon. Probably demand side tech, since that’s the experiment they’ve been running with Walmart DSP (via The Trade Desk). Advertisers may not be thrilled about it, but they won't have much of a choice given all of Walmart's unique assets. This is the classic, walled garden playbook.
Maybe Walmart will buy Yahoo or Viant next? 👀
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