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Does Walmart Need Vizio and a Connected TV Platform?
Walmart is reportedly in talks to acquire smart television manufacturer Vizio for more than $2 billion in a move that could help it keep pace with Amazon — especially with connected TV and video-based media sales — when it comes to performance-based marketing.
Vizio would immediately make Walmart a major player in the affordable smart TV space alongside Roku and Amazon Fire TV. If the deal goes through, Walmart will command more than a fifth of the television market in the U.S. between Vizio and its existing Onn in-house brand, which is powered by Roku’s operating system. Almost 70% of Vizio’s TVs are already sold at Walmart, according to Reuters.
However, many observers believe the primary incentive behind any deal is acquiring Vizeo’s Smartcast streaming software to support its nascent Walmart Connect retail media network.
According to a report from Insider Intelligence, Walmart Connect, which spreads ads based on shopper data across in-store digital displays, connected TVs, radio, and its website, has been growing at a double-digit pace since its launch in 2021. The high-margin business pulled around $3 billion last year, still well behind Amazon’s $35 billion in ad revenues.
Retail media networks have become the fastest-growing part of the U.S. ad industry as Apple and Google crack down on the amount of third-party data they share with advertisers.
If the deal is completed, CPG firms buying ads through Walmart Connect could show those ads to viewers on Vizio TVs in addition to the screens inside 5,000 Walmart stores that pull in 130 million shoppers each week. Walmart believes the biggest area of growth for its ad business will come from selling ads inside stores.
Walmart would also gain access to Vizio’s user base of nearly 18 million active users, ad viewership data, and potentially the ability to track purchases of those ad views to products sold in Walmart stores and via Walmart’s online business. Data on TV ad sales and viewership is controlled by whichever company owns a TV’s operating system.
Dave Morgan, CEO of Simulmedia, an ad tech company, told the Wall Street Journal that a potential deal “gives Walmart control over a massive amount of proprietary data — particularly viewing data, which along with its data on what people are buying — is massively important.”
In a research note, Wedbush Securities analyst Alicia Reese wrote that the potential deal “underscores the massive opportunity for the CTV industry to drive ad dollars away from traditional linear television to CTV,” according to Variety. She still sees Roku as “best positioned to capture ad dollars,” as she suspects many e-commerce partners won’t advertise on Walmart’s, Amazon’s, or Google’s platforms.
Jennifer Kent, VP of research at Park Associates, believes a Vizio acquisition could lead Walmart to follow Amazon in developing its own movies and shows. She told Marketplace, “The tech giants aren’t just making products. They’re very interested in having a relationship with you across many aspects of your life.”
Discussion Questions
What do you think is behind Walmart’s interest in acquiring Vizio and connected TV?
Does a deal make sense?
Poll
Loading …BrainTrust
David Spear
VP, Professional Services, Retail, NCR
Allison McCabe
Director Retail Technology, enVista
This is likely about generating incremental revenue, especially as the core retail (grocery, specifically) business comes under more revenue and margin pressure. Walmart sees Vizio as a platform through which it can potentially make money through advertising – essentially via its Walmart Connect advertising solutions business. There is likely some merit in this, but to be really successful Walmart would need more than just hardware – it would need to develop much more content that could stream on the Vizio devices and Vizio’s existing platform. That’s a whole different ballgame and one that would move Walmart into an extremely competitive market. Of course, this could all be linked with the Walmart+ membership scheme, but it feels very much like chasing Amazon rather than doing something truly innovative. I am also reminded of the time Tesco tried to get into the tablet market via its own brand Tesco Hudl device. It was a complete disaster and was eventually shut down. So, retailers need to have a solid plan when they get into hardware.
Edit: Walmart has now confirmed that it will acquire Vizio and that this is, primarily, about advertising.
While I’m hardly in a position to know why WalMart is doing this, let alone evaluate it (on specifics), intuitively it gives me pause: WM has done well – very well, indeed – by maintaing a laser-like, almost obsessive focus on being a low-cost retailer; its forays into other fields, even related ones, have IMHO been underwhelming. OTOH, offsetting this is the possibilty of being too focused – i.e. being wedded to a business model that loses relevance…look at department stores – and, regardless of the outcome, $2B isn’t a lot of money (for WM anyway). I’ll defer my grade until after the first test is turned in.
There are Vizio TVs already in Walmart’s stores, and Walmart owns its own private-label brand, and I learned at CES, that consumer electronics are not growing at the present time. However, for Walmart, Vizio’s TVs would enable it to expand its advertising business and compete with Amazon, among others.
With smart TVs, users can access streaming platforms, apps, and games, as well as browse the web, unlike with traditional TV sets. I learned at CES that approximately 60% of U.S. households own a smart TV.
The fact that these TVs track and collect consumer data may be what earns them their “smart” designation, and one reason why Walmart is interested.
We watch TV while our TV watches us. We can binge watch anything we want, however we want. However, the TV’s technology catalogs what we watch, when we watch it, and how long we watch it. The TV also collects and shares information about a user’s internet connection, device software, and geographic location. All enticing for Walmart.
This data can then be monetized by TV operators through advertising. Ads appear on smart-TV home screens, on free streaming channels, and in TV apps. That would be also very appealing to Walmart, right?
As more consumers cut their cable subscriptions and turn to streaming, CTV is becoming an increasingly important part of the advertising landscape. I have read that CTV ad spending will reach $30 billion in 2024, up 17% from 2023.
Smart TV brands are well positioned to take advantage of the trend. By selling ads and taking a cut of streaming providers’ ad sales, Walmart can generate revenue.
Walmart has been investing in building “Walmart Connect.” Walmart offers brands the opportunity to advertise in stores and online through this business. More revenue! It’s a highly profitable business.
By acquiring Vizio, Walmart is able to sell advertising on another channel-CTV. This would help Walmart compete better with Amazon, which has a head start in CTV advertising through its Prime streaming service.
Through the integration of these two platforms, connected TV, the fastest-growing advertising opportunity, as well as ad metrics and profit potential would be enhanced. It’s a no-brainer. Walmart should move forward with Vizio. -Db
Walmart would also gain access to Vizio’s user base of nearly 18 million active users, ad viewership data, and potentially the ability to track purchases of those ad views to products sold in Walmart stores and via Walmart’s online business. Data on TV ad sales and viewership is controlled by whichever company owns a TV’s operating system.
The paragraph above is the crux of the issue. Access to data is the holy grail of all things technology. Many, many useful bits and bytes of information which could be of great use in marketing to their consumer.
Vizio is a good brand, makes nice products and they’re really inexpensive. The RMNs are a nice idea for some incremental revenue, but I’m more interested in brand extensions for consumers and Walmart garnering a private label appliance brand. One thumb up for the consumer..I have mixed emotions about the RMN. Walmart is first and foremost, a retailer
This seems like a stretch to me. 18M users, probably users that “fit” in WM’s core target market, okay, however I believe leveraging that data will be difficult to realize. If WM is going to expand with their own range of different items, justify the acquisition price based on expected future sales.
I don’t see it, however I also have confidence that the people driving a potential acquisition are much more informed than I am about this.
Walmart already has a powerful and broad-based physical store presence. They have a powerful ecommerce business. Not as powerful as Amazon, but powerful. And now, by getting into the media business, they are putting Amazon on full notice that they intend to be stronger competitors than ever, and in every customer-facing window in the market.. That’s great news. The customer and the marketplace benefit from Amazon getting all the competition it can get.
Retail media networks is a growing industry and Walmart wants to capture their fair share of the market. The potential acquisition of Vizio seems like a smart strategy to gain more leverage in the retail media network revenue stream. With access to Vizio’s user base of nearly 18 million active users and ad viewership data it would create significant revenue opportunities.
This play is about getting closer to the consumer in all aspects, whether it’s at home, in-store or in-between. The data accumulated, analyzed and translated into insights will give Walmart an incredible view of the intimate details of shopper’s lives, which then will shape new marketing programs, new product innovation and new services.
I hate the surveillance aspect of this, but an inexpensive smart TV is table stakes these days. This is a smart move by Walmart
This takes them into a house-brand of electronics that could be a game changer for Walmart. It also gives them access to data and other benefits of trackable information from streaming products. That said, this is a departure from “traditional retail.” Although maybe this is the new “traditional retail.” Walmart has been known for testing and rolling out slowly. I don’t know how you can do that with a $2 billion price tag. I look forward to seeing how this works out for Walmart. They are VERY smart retailers, so I’m predicting good things.
Jennifer Kent, VP of research at Park Associates, made the most valuable comment today. “The tech giants aren’t just making products. They’re very interested in having a relationship with you across many aspects of your life.”
The question is…Is Walmart ready to be a tech giant? If so, do they recognize that the strategic mindset of a retailer is very different from that of a tech company?
My original comment was deleted for unknown reasons but other comments here are excellent.
At CES, it was apparent that consumer electronics are slowing in growth and development, and Walmart already carries Vizio and also a private label TV.
However, owning a Smart TV brand opens up a sea of new opportunities to help Walmart be competitive with Amazon Prime’s streaming offerings and other dynamics.
As consumers watch Smart TV, Smart TV watches us and all of our own dynamics, and that makes it all worthwhile for Walmart, plus the opportunities to sell advertising to the thousands of brands carried at Walmart and Walmart.com.
Vizio continues to make a reasonably priced smart-tv with a customer media agreement which allows them to monitor how it’s used. Partnering with Walmart gives them a potentially larger platform in home, as well, in store. Walmart has had the chops to invest in and dive into media and tech innovation before, so its likely they are ready to take on the big upside ahead. With this, they can gain incremental revenue and further insights about customers and users.
Large media audiences are a thing of the past; excluding the Super Bowl audience. But the Super Bowl audience is only once a year.
Forget about Vizio’s customer base of 18 million. According to Statistica, Walmart serves over 240 million guests a week. That’s a large audience!
Brilliant move by Walmart to extend it’s reach and value into the home. Bonus clever using the value-priced Vizio smart TVs that many of their guests already own as a portal.
Instant large, engaged audience. Helps store visits through deeper engagement with Walmart and of course Walmart messaging. Generates new ad revenue. Captures more data. Terrific move. I wish I had thought of it.
This move would help Walmart embed its offerings into more of our everyday habits. Gaining access to data on what we watch would help Walmart target shoppers more accurately, and sell more ads to brands by aligning our media consumption with product consumption.
This acquisition is not about the television business; it is about the Retail Media platform Vizio has created across its huge installed base of Smart TVs.
Vizio has built a truly impressive content and advertising platform that provides another screen for advertisers working with Walmart Connect. This development with provide Walmart with targeted access to a highly desirable consumer base that complements its existing store and online touchpoints. Initially a skeptic of this move, but now that it is public I can see the genius behind it. AWESOME!
WalMart already has a relationship with ROKU through their ONN brand. They are now aquiring Vizio and the Smartcast streaming software of Vizio. They are a leader in price with affordable and reliable TV’s. I can not imagine how uselful this could potentially be if WalMart can mine and utilise all the information and analytics that they will obtain. They also may benefit from having their own network akin to Prime, perhaps with, or without original programming. If they can however capture all those eyes and direct them to their own streaming system/offering (perhaps further built with ROKU help?)–through their ONN tv’s as well as now –Vizio– they would control so much potential information and also be able to present to so many! An advertising buffet! Perhaps that is what they forsee? Their own streaming alternative also could, of course, be available to all the ROKU stream devices across the USA if they maintain a good relationship with ROKU. Their system would foreseeably potentially be available to ALL the other streaming options as well,but they could potentially control so very much right from the TV first turn on! Wow! Exciting!
The key aspect of this deal to keep in mind is that Walmart would gain access to Vizio’s user base and data. Data is an invaluable asset that will better help Walmart analyze customer purchase patterns and behavior to better personalize the customer experience and ultimately increase conversions and revenue.