Walmart wants Vizio for the CTV Ad Data

Retail giant Walmart is in talks to acquire Vizio, which sells a popular line of value-priced smart TVs that include an ad-supported free streaming service, in a deal worth more than $2 billion, the Wall Street Journal reported.

The deal, if completed, could make Walmart a significant player in the connected-TV advertising business, competing with the likes of Roku, Amazon and Google/YouTube. Walmart and Vizio have declined to comment on the Journal report.

Vizio Shared increased due to Walmart Interest

Shares of Vizio zoomed up 25% on the report Tuesday, to $9.75/share, pushing the company’s market cap to over $1.9 billion. The stock price of Roku — a competitor to Vizio in the ad-supported streaming market — fell 8.8%.

Walmart is a leading seller of low-end retail sales for connected TVs, including its own private-label brand Onn TV, which is powered by Roku’s operating system. “Logically, a purchase of Vizio would allow Walmart to prioritize their products over competing low-end sets” like those from TCL or Hisense,” MoffettNathanson analyst Michael Nathanson wrote in a research note.

Is Roku in trouble from a Vizio acquisition by the larest seller of Roku products?

The prospect of Walmart buying Vizio presents “a significant challenge for Roku,” as through the first nine months of 2023, Walmart is estimated to have accounted for 40% of Roku’s device revenues, Nathanson wrote. “Once again, 2024 is shaping up to be a year of tremendous change for an industry that was already in flux.”

More broadly, Walmart’s potential deal for Vizio “underscores the massive opportunity for the CTV industry to drive ad dollars away from traditional linear television to CTV,” Wedbush Securities analyst Alicia Reese wrote in a Feb. 14 research note. Roku, even facing new competition from Walmart, remains “best positioned to capture ad dollars,” the analyst opined.

“As Roku continues to expand its market share (Roku has 25% market share of CTV operating systems), it will become an important partner for many e-commerce partners, particularly those that do not want to advertise on competitor platforms such as Walmart’s, Amazon’s, or Google’s,” Reese wrote.

Where did Vizio come from?

Vizio, founded in 2002 and based in Irvine, Calif., says its mission is to “deliver immersive entertainment and compelling lifestyle enhancements” with products that are “the center of the connected home.”

Last week, Vizio announced a significant expansion of its WatchFree+ streaming service, which now includes more than 300 channels, 15,000 on-demand titles and expanded studio content partnerships with Warner Bros. Discovery, Electric Entertainment, Sony and Lionsgate. According to Vizio’s internal data, WatchFree+ viewing hours have more than doubled over the past 12 months.

Vizio sued Leco

In 2016, Chinese tech company LeEco announced a deal to buy Vizio for $2 billion. But that fell apart the following year after China blocked the deal amid a larger move to restrict major overseas acquisitions by Chinese firms. In 2017 Vizio sued LeEco, alleging LeEco had failed to pay $60 million of a $100 million breakup fee; the companies later settled the dispute for undisclosed terms.