Walmart Makes $2.3 Billion Deal to Acquire Smart TV Maker Vizio in Effort to Boost Advertising Business and Compete with Amazon

In a bold move to expand its rapidly growing advertising business and compete with Amazon, Walmart has announced plans to acquire smart TV maker Vizio for $2.3 billion. The deal, if completed, would give Walmart access to Vizio's SmartCast operating system, allowing the retail giant to offer its suppliers the ability to display ads on streaming devices. Walmart has been ramping up its media and ad business with Walmart Connect, giving advertisers access to its massive customer base. In fact, Walmart reported that its global advertising business grew approximately 28% to $3.4 billion last year.

The acquisition of Vizio is seen as a strategic move for Walmart, as Vizio's SmartCast system boasts 18 million active accounts and has grown by 400% since 2018. The platform has more than 500 direct advertisers, with ads now accounting for the majority of the company's gross profit. Vizio's focus on ad revenue aligns with the trend in the streaming industry, where companies like Roku and Vizio have increasingly shifted their focus to advertising.

Seth Dallaire, executive vice president and chief revenue officer for Walmart U.S., expressed excitement about the potential impact of combining Walmart's advertising business with Vizio. He stated, "We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment."

The move comes as Amazon announced plans to charge its Prime members $2.99 per month to keep their movies and TV shows ad-free, in addition to the existing Prime fee. Other major streamers like Netflix and Disney have embraced the dual model of earning revenue from ads while offering subscribers the option to opt out with a higher fee. However, it remains to be seen whether consumers are willing to pay more to see fewer ads, especially with the increasing number of subscription services available.

Following the announcement of the deal, Vizio shares surged nearly 15% to $10.96 per share, while Walmart's shares rose 3.1% to $175.66 per share. In contrast, shares of Roku, one of Vizio's main competitors, tumbled 6.4% at midday. The acquisition of Vizio marks a significant step for Walmart in the competitive streaming and advertising landscape, as the retail giant aims to leverage Vizio's consumer reach and advertising capabilities to drive growth in its media business.