Walmart to buy Vizio for $2.3B, expanding ad platform to CTV

It’s official – Walmart has agreed to acquire smart TV maker Vizio in a deal valued at more than $2 billion, as the retail giant looks to build out an advertising business in the connected TV space and further marry retail and media.

Walmart and Vizio disclosed the purchase alongside the retailer’s quarterly earnings Tuesday, confirming a WSJ report last week that the companies were in talks. Under the deal Walmart will acquire Vizio – and its SmartCast operating system, for $11.50 per share in cash, for an equity value of approximately $2.3 billion.

Speaking on Walmart’s fiscal year 2024 fourth quarter earnings call Tuesday, Walmart CEO Doug McMillon said, “we are really excited about the opportunity to bring together Vizio’s operating system with our ad platform.”

The transaction has yet to close but was unanimously approved by Vizio’s board of directors and received stockholder approval, including Vizio founder and CEO William Wang. Once the deal is completed Vizio will be reported as part of Walmart’s U.S. segment.

As the acquisition, which brings with it Vizio’s base of 18 million SmartCast active accounts and the free ad-supported streaming TV (FAST) service WatchFree+, has yet to close, McMillon said Walmart would be limited in its comments about the purchase until a later date but pointed to the smart TV maker as speeding up company’s existing advertising initiatives.

“Marketplace and advertising are key drivers of profitability growth as we’ve already discussed, and this acquisition accelerates the build out of our advertising platform into the connected TV business, which will be exciting,” he commented Tuesday.

Vizio itself has built up an ad business, counting advertising revenue growth for several consecutive quarters even as smart TV hardware shipments dipped. Vizio generates ad revenue for its Platform+ unit from placements on its WatchFree+ FAST, as well as home screen opportunities that have expanded to include sponsorships and branded sponsored content. Vizio counts over 500 direct advertiser relationships and its Platform+ business now accounts for a majority of the company’s gross profits.

Specifically, Walmart sees Vizio’s advertising business, paired with Walmart’s reach and retail capabilities, as accelerating the company’s U.S. media business, Walmart Connect.

Walmart CFO John David Rainey, on Tuesday’s earnings call, said he thinks the acquisition of Vizio “is very complementary to what we’re already doing organically in that part of the business, and this is an accelerant.”

Walmart Connect, the retailer’s closed-loop omnichannel media business grew 30% for fiscal year 2024. In Q4 fiscal 2024 Walmart marked 33% growth in its global advertising business, including 22% growth for its Walmart Connect business in the U.S. – the latter where it expects Vizio to bolster efforts as it also looks to compete against the likes of e-commerce giant Amazon. For the full year Walmart’s global advertising business grew 28% to reach $3.4 billion.

Walmart already sells Vizio and other lower-end TV sets in retail stores and while retail is certainly part of the picture (where some have suggested Walmart could replace existing operating systems from Roku and Google TV to power its house brand Onn TV devices), owning Vizio appears to be less about hardware and more about data, advertising, and leveraging the growth in popularity of CTV. As Walmart noted its announcement, buying Vizio and its TVOS allows Walmart to serve customers in new ways including entertainment, and create new ways to connect advertisers to customers while giving brands differentiated opportunities to engage at scale “and to realize greater impact from their advertising spend with Walmart.”

Owning the Vizio operating system means having the entry point into the living room TV experience via the home screen, as well as control of viewing data on content and advertisements people are watching.

“We believe Vizio’s customer-centric operating system provides great viewing experiences at attractive price points,” said Seth Dallaire, EVP and CRO at Walmart U.S., in a statement. “We also believe it enables a profitable advertising business that is rapidly scaling. 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.”

And with Walmart ownership of Vizio, the company could control and combine, viewing, ad, and retail shopping data in a way that could provide advertisers more information about results from ad spend, and potentially leverage CTV to use new formats to reach consumers and sell more products.

In a blog post following acquisition report, nScreenMedia analyst Colin Dixon noted how Vizio would allow Walmart to capitalize on similar CTV benefits Amazon get from Fire TV, including to provide direct attribution for advertisers from viewers seeing an ad to purchase activity.

“Definitive attribution makes the ads far more valuable to brands,” Dixon wrote.

Retailers have already put an eye on CTV, including for retail media networks, a channel where ad spending on CTV is forecast to significantly grow over the next several years and some see a symbiotic pairing. For more on retail media and CTV opportunity read here.

Walmart itself has been involved in striking deals with CTV players as it explores new interactive ad and content formats to sell products, including a shoppable ad pilot program with Roku and more recently shoppable TV pilot with select episodes from NBCUniversal’s Bravo network on streaming service Peacock. Others like Best Buy have teamed with Roku to pair retail and viewing data for better ad targeting.

Vizio in Q3 disclosed plans to license its TVOS and nScreenMedia’s Dixon suggested Walmart replace its Onn brand devices with the SmartCast platform and follow through with plans to license to third-party OEMs, expanding its footprint. Roku executives during quarterly earnings Thursday declined to comment on the then-rumored acquisition and what it could mean for the streaming platform, which counts Walmart as a major retail channel.

Analysts at MoffettNathanson in notes to investors last week warned of competitive risks to Roku, while also saying a purchase of Vizio by Walmart could challenge the CTV ad landscape since the retailer can pair first-party data with full-funnel ad inventory, similar to Amazon, which introduced advertising on Prime Video in January.

The surprise interest from Walmart in Vizio could result in “another well-scaled entrant to compete with Roku in their most important retail channel,” wrote analysts led by Michael Nathanson in a February 13 note.