Walmart buys Vizio for $2.3B as retail media race turns to streaming

Dive Brief:

Walmart has agreed to acquire TV maker Vizio for $2.3 billion in cash to accelerate growth for Walmart Connect, its U.S. advertising arm, according to a press release. The news was announced around Walmart’s fourth-quarter earnings Tuesday.
The deal provides the big-box store with another channel to reach consumers at home as connected TV (CTV) and streaming viewership surge. Vizio also has an advertising arm with its own technology solutions and over 500 direct brand relationships, contributing to Connect’s scale.
The acquisition helps Walmart catch up with Amazon, which dominates the retail media category and owns the Fire TV line of smart TV hardware. Walmart’s sales derived from advertising are substantially smaller than its competitor’s but growing quickly, with Connect revenue up 30% in fiscal 2024, per the earnings statement.

Dive Insight:

Walmart’s purchase of Vizio gives the big-box store a powerful chip as retail media networks race to improve their sophistication in more premium advertising areas like streaming video. Walmart Connect stands at the top of the heap among traditional retailers attempting to build out an advertising business but lags behind Amazon, which has won favor with brands thanks to its sprawling e-commerce marketplace and massive reach enhanced by offerings like Fire TV.

Vizio acts as Walmart’s answer to Fire TV while providing Connect with additional ad solutions, direct advertiser relationships and scale. Founded in 2002, Vizio has become a top-selling TV brand at Walmart. The company’s smart TVs come with a built-in SmartCast system that allows viewers to watch content for free with commercials, an approach that has provided the foundation for Vizio’s Platform Plus division. Platform Plus, which mostly focuses on advertising, accounts for the majority of Vizio’s gross profits while SmartCast today has over 18 million active accounts, according to the press release.

“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,” said Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S., in a statement around the deal. “Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week. We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”

Walmart’s $2.3 billion bet on Vizio is another sign that mature retail media networks are eyeing CTV and streaming as their next competitive frontiers. To date, retail media networks have derived most of their revenue from lower-funnel formats like sponsored search and display advertising. But video presents an opportunity to develop more top-of-funnel and brand-building capabilities that could further appeal to advertisers. CTV is forecast by eMarketer to grow U.S. revenues by 22.4% this year to hit $30.1 billion.

Connect performed well during the key Q4 window, with revenue up 22% year over year. Full-year revenue for the unit increased 30%, while Walmart’s global ad business, which includes offerings like India-based Flipkart, was up 28% YoY to $3.4 billion. For comparison, Amazon’s ad sales totaled $14.6 billion in Q4 2023 alone.