Walmart is set to acquire smart TV maker Vizio for $2.3 billion as it aims to expand its advertising business and compete with Amazon.
Driving the news: The deal would provide Walmart access to Vizio’s SmartCast operating system, enabling the retail giant to offer its suppliers the opportunity to display ads on streaming devices.
- Vizio’s SmartCast system boasts 18 million active accounts and has experienced significant growth since 2018, growing by 400 percent.
- The majority of the company’s gross profit now comes from advertising as it has over 500 direct advertisers on its platform.
- Walmart has been focusing on its media and ad business through Walmart Connect, which saw approximately 28% growth to $3.4 billion in global advertising business last year, according to an earnings release on Tuesday.
- As Amazon recently introduced a $2.99 fee to keep movies and TV shows ad-free for its Prime members, Walmart’s acquisition of Vizio provides an opportunity to tap into the advertising potential in the streaming sector.
- Other major streamers like Netflix and Disney have embraced a model that combines advertising revenue with the option for subscribers to pay a higher fee to opt-out of ads.
- Vizio’s shares surged nearly 15% following the announcement of the acquisition, while Walmart’s shares rose 3.1%.
- Notably, shares of Roku, one of Vizio’s main competitors, experienced a 6.4% decline.
