Walmart Makes A $2.3B Smart TV Power Play With Vizio Purchase, Roku Stock Reeling

No longer a rumor, Walmart today announced it has entered into a definitive agreement with Vizio to acquire the TV maker for $11.50 per share in cold hard cash, which works out to a cool $2.3 billion (or thereabouts). It's a huge bet ostensibly on the smart TV market, though the real play here is the opportunity to generate more advertising dollars.

In a press release announcing the pending-purchase, Walmart notes that advertising revenue from Vizio's SmartCast operating system accounted for the lion's share of the company's growth over the past half decade.

"There is a lot to be excited about with this acquisition," said Seth Dallaire, executive vice president and chief revenue officer, Walmart U.S. "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. 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."

That statement says it all—it's much more about the potential to increase its advertising revenue than a desire to own another TV brand (Walmart's in-house TV brand is Onn). Related, it's an opportunity to expand Walmart Connect, the retail giant's closed-loop omnichannel media business, which Walmart says grew 30% for its fiscal year 2024.

As we wrote about when the acquisition was but a rumor, advertisers throw big money at the retail media space. To that end, it's estimated to be a $60 billion business this year. Acquiring Vizio enables Walmart to grab a larger slice of the advertising pie, both from within its more than 10,500 retail locations and also those of Sam's Club, which has around 600 locations in the United States and hundreds more internationally.

It will be another week before Vizio releases its latest earnings report. However, according to its most recent earnings report (from November 2023), there are nearly 18 million active SmartCast accounts in the wild, which collectively streamed 5.2 billion hours of content. Vizio also noted that it expanded its direct ad relationships by 20% in Q3 2023 compared to Q3 2022.

"We believe this is the ideal next chapter in Vizio’s history. By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers," said William Wang, chief executive officer of Vizio. "Walmart’s approach is aligned with Vizio’s mission and vision, and our technology will help bring a scaled, connected TV advertising platform to Walmart Connect. This transaction delivers immediate and compelling value to Vizo stockholders and is a true testament to the hard work of the entire Vizio team."

Meanwhile, shares of Roku are down 8% following the announcement, and down over 29% since news broke that Walmart was in talks to acquire Vizio. Roku is a major streaming player and a competitor to Vizio, with its own brand TVs and a litany of streaming devices.