When news broke on February 20th that Walmart was acquiring TV manufacturer Vizio for a staggering $2.3 billion, it might have seemed like just another business headline. However, this acquisition signals a significant shift in the smart TV landscape, and understanding Why Is Walmart Buying Vizio is crucial for anyone who owns a smart TV – regardless of the brand.
This isn’t just about Walmart getting into the TV manufacturing business. It’s about something much bigger that will likely impact your viewing experience on your smart TV, whether it’s a Vizio, Roku, Google TV, Fire TV, Samsung, or LG.
The Ripple Effect of the Vizio Acquisition
At first glance, Walmart buying Vizio might seem like a move to expand its product offerings. But digging deeper reveals a more strategic play. The sheer size of the deal – over $2 billion – underscores its importance. While TV enthusiasts might be curious about the future of Vizio TVs themselves, the real story lies in what Walmart gains access to through Vizio, and the subsequent industry-wide changes this could trigger.
This acquisition’s impact will extend far beyond Vizio TVs. It has the potential to reshape how all smart TV platforms operate and how we experience television in our homes. Even Apple TV users, while currently somewhat insulated, may eventually feel the effects.
Following the Money: Unveiling Walmart’s Strategy
To truly understand why is Walmart buying Vizio, we need to follow the money and examine Vizio’s history and assets.
Vizio’s growth story is remarkable. Starting in 2006 with $700 million in revenue, it nearly tripled that to $2 billion within a single year. Strategic acquisitions in 2014 and 2015 were instrumental in building its SmartCast smart TV platform, a key element in this acquisition.
Dan Baker / Digital Trends
However, Vizio’s past isn’t without blemishes. In 2015, the Federal Trade Commission (FTC) accused Vizio of collecting and selling non-personal viewing data from its TV owners to advertisers without disclosure. In 2017, Vizio settled these charges, paying a $2.2 million fine and deleting the collected data. Despite this privacy hiccup, consumer demand for Vizio TVs remained strong.
Interestingly, before Walmart, there was another potential buyer. In 2015, the now-defunct Chinese brand LeEco attempted to acquire Vizio for $2 billion, but the deal was blocked by Chinese regulators. Vizio continued its trajectory, placing millions of TVs in households.
By 2020, Vizio had become the second-largest TV brand in the U.S. However, its ranking has since slipped to fourth or fifth. While this might suggest Vizio needed assistance, the Walmart acquisition isn’t about rescuing a struggling TV manufacturer. Instead, it’s about Vizio significantly benefiting Walmart’s strategic goals. Walmart’s acquisition announcement itself hinted at this direction.
Despite recent sales dips, Vizio has successfully placed a vast number of TVs in American homes over the past decade. Their fourth-quarter earnings report states that Vizio boasts approximately 18.5 million active SmartCast users. This massive user base translates to a goldmine of data and, more importantly, advertising real estate.
Therefore, why is Walmart buying Vizio? Because with this purchase, Walmart instantly gains control of over 18 million advertising screens within U.S. households. This move catapults Walmart into the top 20 global ad sellers outside of China. This access to eyeballs and advertising inventory is the true $2.3 billion prize.
Unlocking New Retail Advertising Opportunities
The idea that Walmart’s primary motivation for buying Vizio is to acquire advertising screens, rather than to become a TV manufacturer, is not a novel concept. It’s a logical conclusion when considering Walmart’s core business and Vizio’s assets.
To illustrate this point, consider the current advertising landscape on streaming platforms. Take Amazon Prime Video, for example.
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When accessing content on Amazon Prime Video, viewers are now frequently greeted with advertisements. In one instance, an ad for TurboTax (relevant to tax season) was shown alongside an ad for Blink cameras – an Amazon-owned brand. This exemplifies self-serving advertising: Amazon promoting its own products on its streaming platform.
Furthermore, ads extend beyond just Amazon products. Viewers might also encounter ads promoting shopping on Amazon, such as ads for purchasing Hyundai vehicles on Amazon. This represents a dual advertising strategy.
After 18 years of ad-free streaming, Amazon, a retail giant with robust sales, introduced ads to further encourage product purchases on its platform and for its advertising partners. Alternatively, users can pay an additional $3 monthly fee to remove ads and regain HDR and Dolby Vision HDR quality. The point is clear: retail advertising is now integral to streaming services. This trend extends to Fire TV devices, where ads are displayed even outside of streaming content.
Moving beyond Amazon, let’s examine Google TV. While streaming services within Google TV may feature ads, the Google TV platform itself was initially perceived as relatively ad-free, primarily showcasing content recommendations. However, this is rapidly changing.
Corey Thompson / Digital Trends
Recently, upon turning on a Sony QD-OLED TV powered by Google TV, the first screen displayed was an advertisement for a Kia EV6. The ad was designed to resemble a movie or TV show recommendation, blurring the lines between content and advertising. A full-motion preview of the Kia ad further ensured viewer exposure.
These examples from Amazon and Google TV demonstrate the escalating trend of retail advertising on smart TV platforms. Both companies leverage user data to deliver targeted ads based on shopping preferences. The effectiveness of advertising in influencing consumer behavior is well-established.
Therefore, why is Walmart buying Vizio? Walmart seeks to capitalize on this advertising trend and significantly increase its retail product sales. Walmart aims to expand its already substantial market presence, and Vizio’s advertising platform provides a direct avenue to achieve this.
Walmart product ads on Vizio TVs are inevitable and likely to appear soon. Imagine Vizio TV owners turning on their TVs to watch True Detective: Night Country and being immediately presented with an ad for baby monitors, triggered by a recent diaper purchase within the household. This level of targeted, retail-focused advertising is the future Walmart is investing in.
The Future of Vizio TVs Themselves
Shifting focus from advertising to hardware, what does the Walmart acquisition mean for Vizio TVs? Will their quality decline, improve, or remain unchanged?
The answer, in short, is uncertain. It’s unlikely that even Walmart or Vizio have definitive plans at this stage.
In acquisitions, it’s common for acquiring companies to express commitment to maintaining the acquired company’s strengths – often with generic statements. However, the long-term direction for Vizio hardware remains to be determined. A telling sign is the Walmart press release announcing the acquisition, which overwhelmingly emphasized SmartCast and its new smart TV platform, Vizio Home Screen, with minimal mention of TV hardware itself.
Vizio’s new smart TV platform, called HomeScreen. Digital Trends
It is plausible that Vizio may not continue producing high-end TVs like the P-Series Quantum X. While the Vizio brand name might be considered stronger than Walmart’s existing in-house brand “onn,” the focus on SmartCast suggests a potential prioritization of the advertising platform over hardware innovation.
Broader Implications for the Smart TV Landscape
The rise of retail advertising isn’t limited to streaming services; it’s permeating smart TV platforms themselves. Amazon and Google are already active in this space, and Walmart is now poised to join. What about other major players like Roku, Samsung, and LG?
These brands already incorporate advertising, but their focus hasn’t been as heavily oriented towards retail product ads, at least historically. However, the market dynamics are shifting. Advertisers will gravitate towards platforms with the largest audience reach, and those platforms will seek to maximize advertising revenue.
The consequence is clear: we can anticipate increased advertising across all smart TV platforms, even before accessing specific content.
We are entering a new era of streaming TV. The level of advertising is escalating to the point where the streaming experience is arguably becoming less desirable than traditional cable – a situation that may worsen as cable providers, seeking new revenue streams, potentially adopt similar advertising strategies.
Furthermore, entirely ad-supported TV models are emerging, such as the Telly TV, which offers a free TV in exchange for constant on-screen advertising. This trend underscores the growing prevalence of advertising in the TV viewing experience.
Is there any escape from this advertising deluge? Currently, Apple TV remains relatively ad-free, refraining from third-party advertising on its Apple TV 4K devices. For users seeking an ad-free home screen experience, Apple TV 4K is currently a viable option. However, the long-term sustainability of even Apple’s ad-free stance in this evolving market remains uncertain.
