Walmart is in talks to buy smart TV maker Vizio, as the retailer looks to better compete against the likes of Amazon and potentially capitalize on viewership data and advertising opportunities through connected TV, according to a Tuesday report form the Wall Street Journal.
Citing people familiar with the matter, the WSJ reported Walmart is in discussions to buy Vizio for more than $2 billion, though talks are ongoing and a deal might not come to fruition.
According to the WSJ, the driver for Walmart in considering a deal is to grow advertising revenue, not to sell lower-cost smart TV hardware. Walmart already counts an electronics business through its Onn brand.
For Vizio, its advertising business is where the company has seen the most growth in recent quarters, alongside hardware declines. Its Platform Plus business drives advertising revenue from ads on Vizo’s free ad-supported streaming TV (FAST) WatchFree+ service, as well as placements and partnerships that leverage its TVOS home screen. During its last earnings call, the company disclosed it was exploring licensing its TVOS to third-party TV OEMs. Vizio reports fourth quarter earnings on February 27.
In a Tuesday blog post about the news, nScreenMedia analyst Colin Dixon pointed out that Vizio’s revenue is tiny compared to Walmart’s multi-hundred-billion annual revenue. The real opportunity for Walmart, he wrote, “is to bind 18 million [SmartCast] homes more tightly into its ecosystem” and use the smart TV maker’s OS and FAST service to grow the retailer’s ecosystem beyond the Vizio footprint.
He gave three pieces of advice for Walmart to maximize value from an acquisition of Vizio: Add the WatchFree+ service to its Walmart+ membership program to boost stickiness; expand the Vizio SmartCast OS to Walmart’s house-brand Onn streaming devices (which are powered by Google TV and Android TV meaning Google currently gets most of the recurring revenue generated – swapping it for Vizio OS would give Walmart control); and to follow through with Vizio’s plans to license its TVOS.
“[Vizio] is very late to the TV OS market, and it is not clear how successful it would have been on its own, but this is one way that Walmart can help Vizio,” wrote Dixon. “It can partner with other TV manufacturers sold at Walmart and Sam’s Club stores to bring the SmartCast experience to a much wider audience.”
TVOS wars have heated up over the past year, as owning the operating system gives companies large amounts of viewing data and opportunity for advertising, among other benefits. Vizio for example, using automatic content recognition (ACR) can detect what content or ads are playing on the screen (also called glass-level data) regardless of the service viewers use.
Retailers, including Walmart, also have troves of data on what people are buying. And some retailers are already working to marry retail and viewing data for better ad targeting and outcomes. Last year eMarkter pegged U.S. retail media connected TV ad spend to total $813 million in 2023, with expectations for big growth, projecting spend to reach $5.63 billion by the end of 2027.
During a panel session at Advertising Week New York this past fall, industry executives discussed how retail media networks and CTV are a promising and symbiotic pair that offer new opportunities for brands and advertisers. That includes Ami Lathia, director at Target’s retail media business Roundel, who called CTV “the rising star” for retail media.
And retailers are already exploring CTV opportunities, both for retail media and shoppable experiences. Vizio competitor Roku has marked retail media and shoppable ad partnerships, including with Best Buy, Instacart and Kroger, as well as a shoppable ad pilot with Walmart. Disney’s Hulu also partnered with Kroger to share first-party shopper data to target streaming viewers, while NBCUniversal teamed up with Walmart to test a retail media pairing for ads within livestreaming sports on its Peacock streaming service. More recently, in November Walmart partnered with NBCU’s Peacock for a shoppable TV experience on select episodes of Bravo’s “Below Deck.”
According to the WSJ, buying Vizio would give Walmart more places, through the TVOS interface and FAST service, to sell ads and offer goods to viewers.
“Were the deal to be completed, it would go some way toward matching Amazon’s ability to leverage Fire TV devices to place ads and pitch products,” said Dixon in a blog post Wednesday.
The analyst noted that buying Vizio would allow Walmart to capitalize on the same CTV benefits e-commerce giant Amazon gets from Fire TV, namely providing definitive attribution to advertisers by delivering a direct link between viewers seeing an ad and taking purchase action.
“Definitive attribution makes the ads far more valuable to brands,” Dixon wrote.