US retailer Walmart has announced it will acquire Vizio, a Smart TV manufacturer, in a deal worth $2.3 billion. The agreement sees Walmart pay $11.50 per share in cash.
The move marks Walmart’s most significant play in the world of TV advertising, a space it has been increasingly exploring over the last few years. The company said that ownership of Vizio’s SmartCast operating system (OS) enables Walmart to connect advertisers with TV viewers via its ad-supported streaming service, WatchFree+.
Vizio launched SmartCast across all its devices in 2016, and introduced its own streaming service, WatchFree, in 2018. This was followed by WatchFree+, a range of free ad-supported streaming TV (FAST) channels available on the OS. Vizio now has over 18 million active accounts, according to the company, with more than 500 direct advertiser relationships.
“There is a lot to be excited about with this acquisition,” said Seth Dallaire, EVP and CRO at Walmart US. “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.”
“We believe this is the ideal next chapter in Vizio’s history,” added Vizio CEO William Wang. “By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers.”
Vizio’s Board of Directors has unanimously approved the agreement, which remains subject to regulatory clearance. There will also be a 45-day grace period in which Vizio has the right to terminate the transaction, should it receive and accept another offer.
Joining retail, TV and advertising
The deal sees Walmart step up its competition against Amazon, which also owns a commerce business, advertising division, and streaming service. And although Walmart started as a brick-and-mortar retailer, it is increasingly moving into retail media and digital advertising, having invested heavily in its media business, Walmart Connect.
This time last year, Walmart announced plans to step up its investment in data and advertising, in order to secure its business in the face of persistent inflation and dwindling consumer spending. In 2021, Walmart launched an in-house demand-side platform (DSP) powered by The Trade Desk, and now more than half of all the company’s ad sales come through programmatic channels.
But advertising remains a relatively small part of Walmart’s overall business, a segment it hopes to grow with this latest transaction. The company said by combining Walmart Connect with Vizio’s ads business, the company can tap into the growth of connected TV.
“Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week,” said Walmart’s Seth Dallaire. “We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”
Walmart is no stranger to the TV device business, selling its own brand of consumer electronics called Onn. And last year the retail giant partnered with ad tech firm Innovid to bring personalised CTV ads to the Walmart DSP. In 2022, Walmart teamed up with Roku to bring ecommerce functionality to TV ads, enabling viewers to buy Walmart-sold products directly through Roku’s streaming platform.
But the Vizio deal gives Walmart a CTV advertising platform, and the ability to reach consumers at the device level. When rumours of the acquisition first surfaced last week, marketing data firm WARC noted that Walmart’s customer-level shopping data rivals Amazon Prime in the US. “A device would offer Walmart the chance to become a big player (should it continue to sell lots of TVs) in a highly fragmented market in which incremental reach is very difficult to find,” said WARC.
