Walmart has officially closed its $2.3 billion acquisition of Vizio, solidifying its entry into the connected TV (CTV) advertising and tvOS space. This strategic move positions Walmart to leverage Vizio’s SmartCast platform and ad-supported streaming service, WatchFree+, to expand its Walmart Connect advertising network and compete with tech giants like Amazon, Roku, and Google.
With this acquisition, Walmart aims to transform its Walmart Connect business by leveraging Vizio’s 19 million active accounts and advanced advertising technology. The deal underscores Walmart’s broader ambitions to grow beyond low-margin retail sales into high-margin advertising and content-driven revenue streams.
Strategic Importance of the Acquisition
1. Strengthening Walmart Connect’s Ad Network
Vizio’s SmartCast platform and WatchFree+ FAST service provide Walmart with an immediate foothold in the lucrative connected TV advertising market. These platforms enable Vizio to sell ads on its home screen, within its apps, and through inventory partnerships with streaming services. By integrating these capabilities with Walmart Connect, Walmart can scale its ad inventory and deliver highly targeted ads to consumers.
As I noted in CNBC’s coverage of the acquisition,
“Vizio TVs include ACR technology, which allows the company to understand a customer’s streaming preferences. Walmart can now combine that data with its shopping insights to give customers more relevant ads and measure their effectiveness. This is the ‘holy grail’ of advertising.”
This synergy significantly enhances Walmart’s ability to connect its vast consumer data with precise advertising, creating a closed-loop system that advertisers increasingly demand.
2. Expanding Walmart+ Offerings
The acquisition opens the door for Walmart to offer exclusive streaming content or even a proprietary platform akin to Amazon’s Prime Video. By integrating Vizio’s SmartCast technology into its Walmart+ membership program, Walmart could create an enriched bundle of shopping and entertainment benefits, driving subscription growth and increasing customer loyalty. This may also prompt Walmart to reassess its current Paramount+ partnership.
3. Capitalizing on High-Margin Advertising Revenue
Retail media is projected to hit $59 billion in 2024, and Walmart is positioning itself to capture a larger share of this market. Advertising revenue, which boasts operating margins of over 65%, far outpaces the 4% margin typical of retail operations. The acquisition signals Walmart’s intent to shift its revenue mix toward high-margin segments, mirroring Amazon’s successful strategy.
4. Integrated Consumer Insights
The combination of Vizio’s automatic content recognition (ACR) technology and Walmart’s extensive consumer shopping data creates unparalleled targeting opportunities. Vizio provides insights into viewing habits, such as the genres and apps consumers prefer, while Walmart contributes detailed data on what customers purchase in-store and online. This integrated dataset allows Walmart to deliver personalized ads and measure their effectiveness in driving conversions.
5. Impact on Roku and the Retail Ecosystem
Vizio’s SmartCast operating system provides Walmart with a proprietary platform to challenge Roku, which relies heavily on Walmart for retail distribution of its devices. With Walmart now owning a competing OS, Roku could face reduced shelf space or other competitive pressures within Walmart stores. This move may also prompt streaming services to renegotiate their terms with Vizio, benefiting Walmart through subscription tax and advertising revenue share agreements.
Broader Industry Implications
Disruption in the CTV Market
This acquisition highlights Walmart’s ambition to establish itself as a key player in CTV advertising, an area traditionally dominated by tech companies like Amazon, Roku, and Google. By controlling both hardware and ad inventory, Walmart gains end-to-end control over its advertising ecosystem, enabling seamless integration of ads into its SmartCast platform.
Pressure on Competitors
Amazon, which reported $15 billion in ad revenue in a single quarter, has leveraged its Fire TV platform to dominate the CTV ad space. Walmart’s acquisition of Vizio signals its intent to challenge Amazon directly by creating its own vertically integrated advertising system. The move also raises questions about how other retailers like Target and Best Buy might respond to Walmart’s growing dominance.
Global Expansion Opportunities
While Walmart Connect is primarily a U.S.-centric platform, Vizio’s SmartCast technology provides a scalable solution for global expansion. Walmart’s extensive international retail footprint offers significant opportunities to introduce Vizio TVs and advertising solutions to new markets.
Challenges and Considerations
While the acquisition provides significant strategic advantages, Walmart faces several challenges:
- Consumer Perception of Ad-Heavy Experiences
Consumers are increasingly wary of ads intruding on their streaming experiences. Walmart must balance monetization and maintaining user satisfaction to ensure the long-term success of Vizio’s platforms. - Integration of Onn TVs
Walmart’s private-label Onn TVs currently use Roku’s operating system. Transitioning to Vizio’s SmartCast could streamline operations but risks alienating Roku, a key partner. - Regulatory Scrutiny
As Walmart integrates Vizio’s data and technology, it must navigate privacy regulations to ensure compliance while maximizing the value of its data-driven advertising business.
Walmart’s Go-Forward Strategy
1. Leveraging Data Synergy
Walmart should focus on integrating Vizio’s ACR technology with its existing retail data to deliver personalized ads in high-margin categories like groceries and consumer goods.
2. Expanding Content Offerings
The retailer could explore creating or licensing exclusive content to enhance Walmart+ and boost membership growth, potentially competing with Amazon’s Prime Video.
3. Optimizing Retail Space
Walmart can strategically use its retail footprint to promote Vizio products, maximizing brand visibility and driving the adoption of SmartCast.
4. Entering New Markets
Walmart can expand the reach of Vizio TVs globally, leveraging its retail network to introduce the brand to international markets.
5. Building a Unified Ecosystem
By consolidating its ad offerings across Walmart Connect, SmartCast, and WatchFree+, Walmart can create a unified ecosystem that appeals to advertisers and consumers alike.
Final Thoughts
Walmart’s acquisition of Vizio marks a strategic leap in transforming from a retail powerhouse to a major player in tech and advertising. By combining Vizio’s technology with its vast retail ecosystem, Walmart is set to reshape the connected TV advertising space and expand its influence in the digital economy.
