Why is Walmart buying TV maker Vizio for $2.3 billion, when they already own a TV manufacturer? Walmart already sells their own in-house cheap TVs and streaming box through their brand named Onn.
On the face of it this deal doesn’t make sense, but if we dig into a bit Walmart’s intentions are perfectly clear.
First, like I mentioned Walmart already has their own brand of TVs called Onn (horrible name I agree, and I’ve literally never heard of or seen them in their stores or Sam’s Club. They are marketed as super cheap no-thrills TVs, so that could help explain why they’d want to buy a bigger, better known brand.
Second, advertising. That’s what this is all about. Vizio has their own streaming service called Vizio’s SmartCast Operating System, and it allows customers to stream free ad-supported content on Vizio TVs.
Sure, Walmart has their own media streaming service called Walmart Connect, but they must have done the math and determined the best way to grow was through acquisition.
Advertising sales has a much higher profit margin than selling groceries or clothing. Walmart’s advertising sales grew 22% in the fourth quarter of 2023.
Like everyone else it seems, Walmart is trying to compete with Amazon’s growing ad segment. Vizio’s SmartCast system has 18 million active accounts, so that’s a lot of eyeballs Walmart can monetize via ad sales.
I’m reminded of something the famous cryptographer and cyber security expert Bruce Schneier once said, “If something is free, you’re not the customer; you’re the product”.
He had no idea how right he was.
Walmart to buy TV maker Vizio for $2.3 billion in move to grow its ad business