In a $2.3bn deal, Walmart intends to acquire Vizio and bolster its US media business with Vizio’s advertising solutions business, its connected TV (CTV) advertising platform, and its TV hardware and software expertise. The transaction, should it come to fruition, will further pit Walmart, the world’s largest retailer, against Amazon, the world’s second-largest, whose Fire TV hardware and Prime Video and Freevee streaming services are part of its broad e-commerce and digital advertising efforts. Moreover, the acquisition could be a significant booster for Walmart+, with multi-pronged, synergistic positioning along the lines of the Amazon Prime membership.

Vizio acquisition will rock the smart TV world

By taking over Vizio, Walmart will also pose a strong challenge to other players in the smart TV platform sector that market their own TV hardware and operating systems (OSes), including Roku, Apple, Google, Samsung, LG Electronics, TiVo, and Xumo. That last name on the list, part of the joint venture formed by cable companies Comcast and Charter, could be especially challenged since it’s still a nascent player, having evolved into its current incarnation out of Comcast’s XClass TV effort, which saw manufacturer Hisense build smart TVs based upon Comcast’s platform and sell them beginning in October 2021 through, ironically, Walmart stores and Walmart.com.

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Walmart and Sam’s Club are long-time Vizio retail partners. However, Walmart also sells its own TVs, branded as Onn and using various OSes, including Google TV and Roku. While Google obviously has many business interests and revenue streams, Roku is all about connected TV products and stands to feel the competitive heat as Walmart shifts its focus from Onn and other dedicated Roku-enabled TVs currently sold through Walmart to the better-known Vizio brand equipped with its own Smartcast OS.

Vizio’s business model has been evolving

In 2020, Vizio unveiled Platform+, which includes its SmartCast OS and Inscape, which powers its data intelligence and services. Vizio’s free ad-supported TV (FAST) service, WatchFree+, combined with the company’s SmartCast OS, advertising business, and Inscape TV viewing data are crucial to evolving Vizio’s business model, enabling the company to grow revenues from services even as its device sales slump. Vizio has been aggressive about creating owned and operated channels that curate content in multiple genres, including food, crime, and travel. WatchFree+ now features over 300 channels, 15,000 on-demand titles, and ten Vizio-curated channels programmed in-house. In January 2024, Vizio claimed WatchFree+ viewing hours had more than doubled over the past 12 months.

WatchFree+ will help Walmart challenge Amazon Prime Video and Freevee on the streaming video front and represents a puzzle piece that Walmart has been lacking after selling on-demand video streamer Vudu in 2020 to Fandango Media. Walmart acquired Vudu in 2010 but never figured out how best to monetize it or develop it to challenge Amazon Prime Video.

The combination of Walmart’s advertising services and consumer shopping data – from online and physical stores – with Vizio’s advertising business will appeal to brands seeking more targeted advertising opportunities. One potential red flag is the fact that Vizio agreed to pay $2.2m in 2017 to settle charges brought by the US Federal Trade Commission (FTC) and Office of the New Jersey Attorney General, which alleged the company collected data on TV viewers who had not opted in to share it and then sold that data to advertisers. Walmart is obviously comfortable with Vizio’s efforts since then to revise its data collection practices.

During its recently ended fiscal fourth quarter, Walmart said Walmart Connect advertising sales grew 22% quarter-over-quarter. Though advertising remains a minuscule part of Walmart’s overall business, it provides diversification and higher margins than Walmart’s retail operations. The company’s acquisition of Vizio is poised to create an advertising and e-commerce powerhouse with a vast impact across both the retail and smart TV sectors.

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