Walmart buys smart TV set maker Vizio for $2.3 billion

Arkansas giant looks to expand ad business

In a first, Bentonville, Ark.-based Walmart announced Tuesday it is purchasing set-maker Vizio in a $2.3 billion, $11.50 a share deal.

Generally, most sets are manufactured outside of the United States, either in Japan or South Korea. Some retailers partner with a manufacturer to produce branded TV sets, such as Best Buy with Insignia. But this marks the first time a retail outfit outright purchased a TV maker as Walmart is the nation’s largest retailer, selling everything from electronics to groceries to clothing.

In an older media context, think of this as Sears buying Zenith as the locally-based electronics giant once produced TV sets, radios, and stereo systems at several plants in the Chicago area and was once based in north suburban Glenview (today, the Zenith name exists as a digital rights management and ATSC developer, owned by South Korean-based LG Electronics.)

But the purchase of Vizio isn’t about selling sets – it’s about the data those smart TVs can collect on consumers. Vizio developed a Smartcast Operating System, where viewers can stream advertiser-supported content on their TVs, and collect their data. WalMart wanted the system to boost their ad business to reach more consumers as Vizio’s system is in eighteen million homes through their TV sets.

“This is a huge deal for the media industry,” said Rich Greenfield of LightShed Partners on CNBC’s Last Call Tuesday night. “It’s all about data when you’re selling ads, understanding what happened after you saw an ad.”

Walmart is competing with retail giant Amazon, who once started as an online bookseller but is now a major player in retail and in entertainment thanks to Prime Video and Amazon Music. WalMart’s acquisition is a response to Amazon’s continued ad growth in the connected TV space, where Amazon has the Fire dongle stick and uses the name to sell branded TV sets.

Vizio’s competitors in the set-maker space include Samsung, TCL, Hisense, the aforementioned LG, and stick-maker Roku, who now sells branded televisions and could be most impacted by Tuesday’s deal. WalMart’s stock closed up Tuesday while Roku’s closed down, as investors are voicing concerns about the continuing decline of ad revenue and WalMart’s decision to enter the space would accelerate those losses. Roku released its fourth-quarter earnings report on February 15, with year-to-year gains and 80 million accounts, but Wall Street wasn’t impressed in after-hours trading, sending the stock tumbling down some fourteen percent. 

It is not known if Vizio televisions would continue to be sold outside of Walmart, as retailers Costco and Target also sell the brand.

The timing of the $2.3 billion acquisition comes as Walmart made the questionable decision to close several stores in the Chicago area last year, including the Chatham SuperCenter in Chicago and two stores in south suburban Homewood and Plainfield. Many criticized the retail giant for the closures given the proliferation of food deserts on Chicago’s South Side and the south suburbs. Walmart also closed stores in Milwaukee, Atlanta, Washington D.C., and Portland, Ore., and plans to close more stores in 2024 including one in San Diego.