Walmart acquires Vizio

Walmart Acquired Vizio for $2.3 Billion

Walmart has entered into an agreement with Vizio to acquire VIZIO for $11.50 per share in cash, equating to a fully diluted equity value of approximately $2.3 billion. Vizio is a US based publicly traded company making and selling televisions, sound bars, viewer data and advertisements. In 2016, A Chinese electronics company LeEco had announced it would acquire Vizio for $2 billion, but it was blocked from acquiring Vizio as a part of a crackdown by the Chinese government on Chinese businesses acquiring foreign companies.

Vizio was founded in 2002 and since then it has sold a vast number of televisions. Walmart is not simply acquiring a television brand or service, but strategically investing in the future. Walmart is acquiring Vizio with Smart Cast, its operating system. Vizio has experienced a slide in TV sales over the past few years and yet it has a large number of TVs installed in US households running Smart Cast OS. According to its 2023, Q4 report, there were 18.5 million subscribers (Monthly Active Users at the end of 2023) of the service. Vizio has experienced solid growth in its advertising revenue in 2023. The company enjoys solid margins on its advertising revenue. Its Smart Cast Average Revenue Per User for the fourth quarter of 2023 had reached $32.48.

In 2023, Vizio added 86 apps to its service and also released some important updates for an improved user experience. The software update of 2023 is said to have fundamentally altered the TV experience for users as apps can now load faster, the home screen is completely changed and search and voice search are improved. Vizio also launched Viziogram in 2023 which allows users to share pictures and videos with friends and family on the TV screen. Vizio is not just a television brand but also a significant advertising service organization. Following the acquisition, Vizio will become a part of Walmart’s US operations.

The deal can be highly profitable for Walmart not because it is expanding into televisions but because it has acquired a significant advertising platform that connects Walmart with millions of users in the US. The Walmart Vizio combination is expected to benefit Walmart’s media business Walmart Connect significantly. So, the acquisition has also made Walmart a significant advertising service organization. As Walmart itself claims, the benefits offered by this acquisition would be further strengthened by the growth of connected TV platforms and Walmart’s industry-leading TV panel sales. However, it appears that rather than the TV hardware, the deal is more about SmartCast.

The Vizio users can stream content for free by watching ads. Vizio has built a significant advertising business based on this model. Its direct advertiser relationships (more than 500) also include several Fortune 500 brands. Walmart Connect, Walmart’s media business has also experienced more than 30% growth in fiscal 2024. However, several people are also seeing Walmart’s acquisition of Vizio as a strategic move to enhance its capabilities and compete with Amazon.