Walmart is buying Vizio, one of the most familiar brands in the television industry, for $2.3 billion—but the deal is less about selling more television sets and more about the potential it has for advertising revenue.
Vizio is a leading maker of smart TVs, and Walmart sees that as a way to “create new opportunities to help advertisers connect with customers, empowering brands with differentiated and compelling opportunities to engage at scale.”
That could help Walmart grow its Walmart Connect media and digital-advertising business, which the company is hoping will help it expand its revenue streams beyond selling products, both online and in stores. Vizio’s success in the smart-TV category could give that unit not only a larger audience, but access to additional information like viewership data.
“We believe VIZIO’s customer-centric operating system provides great viewing experiences at attractive price points,” Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S., said in a statement. “We also believe it enables a profitable advertising business that is rapidly scaling… We believe the combination of these two businesses would be impactful.”
Adding Vizio to its internal lineup of product will give Walmart two in-house television brands. The company’s ONN TVs are targeted at customers looking to spend the bare minimum on a set. (Those sets use operating systems from Roku, which was once rumored to be a possible acquisition target for Netflix.) Vizio is a midrange brand that many consumers have embraced as an alternative to premium, significantly more expensive sets.
The move also helps Walmart compete better against Amazon’s Fire TV in-house brand, which has helped that retailer grow its targeted advertising business.
The deal is expected to close sometime this summer. Walmart shares were up more than 5% in early trading Tuesday, while Vizio shares jumped 15%.